Preamble

The House met at half-past Two o' clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Namibia

Mr. Clinton Davis: asked the Lord Privy Seal if he will make a statement on the latest proposals of the contact States relating to elections in Namibia.

Mr. Robert C. Brown: asked the Lord Privy Seal if he will make a statement on any consultations that Her Majesty's Government have had concerning the holding of elections in Namibia.

The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): Most of the constitutional principles have been agreed by all concerned, but agreement has not yet been reached on the Five's proposals concerning the electoral system for the constituent Assembly. These proposals are fair to all parties and groups. The Five hope to resolve this question as soon as possible, with the co-operation of those directly involved, and to move on to phase 2 of the negotiations without further delay.

Mr. Davis: Is the Minister aware that the South Africans have frustrated a settlement in Namibia for nearly a decade and a half? Does he agree that the propositions advanced by the contact States about the electoral process are enormously complicated, especially for an unsophisticated electorate that is unused to elections? Does he agree that that is a sign that the contact States are preparing to appease South Africa because of that Government's obstruction?

Mr. Luce: It is an exaggeration to say that the system now being discussed is enormously complicated. Not only in Europe, but in African countries, there are a variety of systems in which a number of votes are allowed for. We are here working towards a mixed system of proportional representation and single-member constituencies, although we are now working through the contact group to see whether there are further ways of simplifying the system. We are in close touch with all the parties concerned.

Mr. Robert C. Brown: Is the Minister aware that the proposal to appoint Mr. Mishra, an Indian diplomat, as United Nations ambassador for Namibia is reported to have been opposed by Britain and other Western States, as being likely to delay Namibian independence? Will he deny that report, because if it is true it must surely mean further appeasement of the South African regime by the contact States?

Mr. Luce: No, what the hon. Gentleman says is absolutely the case. The Government do not believe that filling the post of United Nations commissioner to Namibia is helpful to the current negotiations. Neither the United Nations Commission nor the United Nations Council for Namibia has a role to play in the present negotiations. We do not believe that the present position is helpful when we already have a United Nations representative to play a role in the transition and when the Five are working extremely hard to achieve a settlement.

Mr. Nicholas Winterton: Does the Minister accept that many Conservative Members agree with his reply to the hon. Member for Newcastle upon Tyne, West (Mr. Brown)? Does he agree that it is SWAPO which is now holding up progress towards the independence of Namibia, as it does not accept the election proposals advanced by the contact group? Does he further agree that it is important that the United Nations should remain impartial if there is to be any meaningful and constructive settlement?

Mr. Luce: On my hon. Friend's latter point, as I said to the hon. Member for Hackney, Central (Mr. Davis), it is essential when we reach phase 2 to discuss the impartiality of the United Nations. That is an important factor in a successful transition.
On my hon. Friend's first point, SWAPO has expressed anxiety about the election method. We are discussing that with SWAPO and the front-line States. I do not believe that the procedures are complex. It is possible to find a simple procedure and we are working on that now

Mr. Hooley: Is the Minister aware that the whole basis of the negotiations is a resolution that was passed unanimously by the Security Council in 1976? How can he claim that the United Nations has no role in the matter? Will he acknowledge that the dual system of voting is widely regarded as a trick to exclude the majority of the African population in Namibia from real power in an independent State?

Mr. Luce: The hon. Gentleman cannot have listened to my earlier answer about the United Nations commissioner. That is quite different. The Government fully support Security Council resolution No. 435, which allows the United Nations to play a key role in the transitional phase. However, we opposed the appointment of a United Nations commissioner this week. That is a different matter and we believe that it further complicates the process. That should be made clear.

Suppression of Terrorism (Convention)

Mr. Stanbrook: asked the Lord Privy Seal what is the policy of Her Majesty's Government towards seeking the adherence of those States which are parties to the international convention on genocide but not the European convention for the suppression of terrorism, to the latter convention.

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): We strongly support the European convention on the suppression of terrorism, and would like all eligible States to become a party to it.

Mr. Stanbrook: As the convention on terrorism is just as consistent with the general principles of international law as the convention on genocide, and as both


conventions deny to political offenders the right of immunity from extradition, are not the Government of the Irish Republic hypocritical, considering that they have already signed the convention on genocide, to assert that they cannot sign the convention on terrorism on constitutional grounds? If that is a demonstration of their sincerity, what reliance can be placed on their promises to respect the will of the majority in Northern Ireland?

Mr. Hurd: My hon. Friend's question is really for the Irish Government. I can only say that we hope that they will find a way through the constitutional difficulties that they seem to see and will join the convention.

Israel

Mr. Latham: asked the Lord Privy Seal whether he will make a statement on the Foreign Secretary's visit to Israel.

Mr. Neil Thorne: asked the Lord Privy Seal if he will make a statement about the Foreign Secretary's visit to Israel

Mr. David Marshall: asked the Lord Privy Seal whether, in the visit of the Secretary of State for Foreign and Commonwealth Affairs to Israel, he has yet discussed the priority attached by the Israeli Government to security as an essential part of the peace process.

Mr. Hurd: My right hon. and noble Friend arrived in Israel only last night. Today he has had talks with, among others, the Israeli Prime Minister, Foreign Minister and Defence Minister.

Mr. Latham: Is my right hon. Friend aware that Conservative friends of Israel in the House send good wishes to Lord Carrington on his important mission and hope that he will be received with courtesy and warmth in Israel, because we believe him to be a fair-minded man who is genuinely seeking peace?

Mr. Hurd: I am very grateful to my hon. Friend for what he has said. It is in exactly that spirit that my right hon. and noble Friend is in Israel.

Mr. Thorne: During his visit to the Holy Land, will my right hon. and noble Friend take every opportunity to promote trade between this country and Israel, particularly with a view to overcoming the pernicious Arab boycott?

Mr. Hurd: I think that my hon. Friend knows the Government's position on that. We in no way approve of the boycott, but we think that it is a matter best left to the judgment of the firms concerned.

Mr. Marshall: Will the Secretary of State, during his visit to Israel, assure the Israeli Government that no representative of the British Government will meet representatives of the Palestinian Liberation Organisation so long at it remains committed to those clauses of its convention that call for the destruction of Israel?

Mr. Hurd: We have contacts with the PLO at official but not at ministerial level. We use those contacts to urge the PLO to recognise Israel's right to exist and to make it absolutely clear to Israel that the PLO would fully accept the existence of Israel if Israel accepted self-determination for the Palestinians.

Mr. Cyril D. Townsend: Will the Foreign Secretary tell the Israeli authorities that, despite the many injustices

that Jewish people have suffered in previous years, the way in which they are establishing settlements on occupied Arab land in Jordan, and their dictatorial policies on the West Bank, only exacerbate tensions in the area and are against the long-term interests of Israel?

Mr. Hurd: Our views on the settlements have been frequently stated. In the past few days we have made a statement deploring the present activities on the West Bank. A statement was made by the European Council yesterday to the same effect.

Mr. David Watkins: Will the Secretary of State represent to the Israeli Government that actions such as the dismissal of elected West Bank mayors and councillors by the illegal occupation forces are not only contrary to the Geneva convention but unacceptable to all fair-minded people in the United Kingdom?

Mr. Hurd: We certainly regret the dismissal of those elected representatives.

Mr. Alan Clark: Does the Minister agree that my right hon. Friend might suggest to his hosts that if they are serious about improving relations between Britain and Israel they might desist from publishing on postage stamps likenesses of prominent Jews who have murdered British subjects?

Mr. Hurd: I am not sure that that particular point will come up, but I have a good deal of sympathy with what my hon. Friend says.

Mr. Moyle: Is the Minister aware that we support the Foreign Secretary's visit to Israel, because it keeps open lines of communication in a difficult situation, but that most Arabs believe that the Israelis are on the point of annexing the West Bank and the Gaza Strip? Will the Foreign Secretary therefore associate himself completely with the EEC statement on this yesterday and tell any Israelis who are thinking of annexation that we would regard such a move as very dangerous and prejudicial to a peaceful settlement in the Middle East?
Is the Minister also aware that we would associate ourselves with his right hon. Friend's statement about the dismissal of the West Bank mayors and with the views of the Israeli Labour Party in the Knesset on 23 March, which were vigorously critical of the current Israeli Government?

Mr. Hurd: As the right hon. Gentleman has said, any attempt at annexation of the West Bank would certainly be very dangerous, but we have no actual evidence that that is being contemplated.

Mr. Lawrence: Contrary to what the right hon. Member for Lewisham, East (Mr. Moyle) has said from the Labour Front Bench, have not the disturbances on the West Bank been instigated and organised by the terrorist PLO precisely because the Israeli Government are beginning to make headway with moderate Palestinian leaders?

Mr. Hurd: I advise my hon. and learned Friend not to accept any such simple explanation. What has happened on the West Bank is the outcome of one incident feeding on another, leading to a cycle of violence and repression. As other countries, including ourselves, have known, this is a consequence of a regime of military occupation. It is for the Israelis to consider, as they are now clearly doing, whether such a system provides the best foundation for the security of Israel.

El Salvador

Mr. Frank Allaun: asked the Lord Privy Seal what reports he has so far received from the observers sent to the elections in El Salvador on 28 March.

Mr. Luce: We have not yet received a report from the United Kingdom observers.

Mr. Allaun: How can there be free elections when anti-junta candidates do not stand because they are afraid of being murdered and when voting is compulsory? Secondly, do the British Government intend to recognise the Right-wing extremists now in the saddle in El Salvador?

Mr. Luce: As I have said, we have not yet received the report of the two observers. They will return this week and report to my right hon. and noble Friend. Their report will then be published. I think that it would be sensible to wait and see what they have to say. That is why we sent them there—to see whether the elections were a valid test of opinion and to learn about the form in which they took place. On the first evidence, with more than 1 million people reported to have voted, we should be very cautious of insulting the people of that country who wish to use the ballot box rather than the gun.

Sir Anthony Kershaw: Although the result of the elections may not seem entirely satisfactory, does not the very large turnout show that there is a majority in El Salvador that favours the ballot rather than the bullet? Ought not the results of the elections to be respected both inside and outside El Salvador?

Mr. Luce: I very much appreciate what my hon. Friend has said, as I know that he has been in El Salvador with an all-party team. It appears from the first evidence that the poll has been high. I should have thought that anyone who believes in democracy would condemn those who use the gun to try to intimidate those who wish to use the ballot box.

Mr. Healey: Does the Minister agree that 1 million voters is well under half those of electoral age and that many of those who voted did so out of fear of being punished by the Government, because voting is compulsory? Does he further agree that, unfortunately, my predictions have proved true and the situation after the elections is infinitely more difficult? Does he also agree that the only alternative now to negotiations, as suggested by the Mexican President, is continuing suppression of the people by a Government in El Salvador who have no respect whatever for human rights and have indeed boasted of that fact?

Mr. Luce: I find it difficult to understand how the right hon. Gentleman, sitting in the House, can come to such sweeping conclusions at this stage. Surely it is more responsible to wait to hear what the observers have to say. Let us then read their conclusions and discuss them.

Mr. Healey: The hon. Gentleman's figure of those who voted is well under 50 per cent. of those of electoral age. We all know that those who have not voted are breaking the law in El Salvador, yet about 60 per cent. chose to break the law rather than to vote, unless they were forced into emigration by the actions of the previous Government. Does the right hon. Gentleman agree that the majority of voters voted for parties of the extreme Right

wing, led by a man who has described President Duarte as a tool of international Communism? Is that the right hon. Gentleman's view?

Mr. Luce: I am surprised by the rather unconstructive way in which the right hon. Gentleman seems to be approaching this problem time and again.

Mr. Stanbrook: My hon. Friend should not be surprised.

Mr. Luce: Yes, perhaps I should not be surprised. I am trying to help the right hon. Gentleman. I remain surprised by the attitude that he has adopted. Let us wait to hear what the observers have to say. In the meantime we note that the figures suggest that about 60 per cent. of the electorate has voted. If the right hon. Gentleman believes in the use of the ballot box, surely he should be supporting and encouraging that process rather than encouraging those who have used the gun to try to intimidate.

Mr. Eldon Griffiths: Is my hon. Friend aware that those of us who had the privilege of visiting El Salvador find it hard to arrive at the same sort of certitude as the right hon. Member for Leeds, East (Mr. Healey) has expressed, without having been there? Will he accept that, whatever the result of the election, the main attack on human rights has come from those who sought to prevent people from going to the ballot box in peace? Secondly, does he accept that we should have the greatest admiration for the courage of the Salvadoran people who risked their lives to prosecute an election by the ballot and not by the bullet?

Mr. Luce: I agree entirely with what my hon. Friend has said.

Mr. Hooley: Is the hon. Gentleman aware that not all of those who went to El Salvador entirely share the views of the hon. Member for Bury St. Edmunds (Mr. Griffiths)? The evidence that we received from the man who was organising the elections showed that the techniques involved would allow the police in El Salvador to identify those who vote and those who do not. As those who do not vote are guilty of a crime, punishment may follow.

Mr. Luce: When the observers' report is available it will be published in full. It will be available to the House, to the press and to the British public. We shall be able to study in great detail what the observers have to say. They have been in El Salvador for a number of days and they have observed the elections. Let us wait to hear what they have to say.

United Nations Special Session on Disarmament

Mr. Ioan Evans: asked the Lord Privy Seal what ministerial representation Her Majesty's Government will have from his Department at the United Nations special session on disarmament.

Mr. Hurd: As my right hon. Friend the Prime Minister told the House on 16 March, she plans to go to the second United Nations special session on disarmament. There are at present no plans for a Foreign and Commonwealth Office Minister to go as well.

Mr. Evans: Does the Foreign Office think it wrong that the Heads of Government should be meeting in Geneva at the same time as the United Nations disarmament conference takes place? Surely it would be a good idea for


the Heads of Government of all countries throughout the world, including those from the NATO and Warsaw Pact countries, to attend the session and for Britain to submit constructive proposals for nuclear disarmament, for reducing the sale of conventional weapons throughout the world and for diverting the massive expenditure of £500 billion on the arms race to deal with the problem of world poverty, which would be a better way of bringing peace throughout the world?

Mr. Hurd: The hon. Gentleman's argument about dates is a thin one. The NATO summit will last for one day whereas the United Nations special session will sit for five weeks. Many people, including my right hon. Friend the Prime Minister, plan to go to both.

Mr. Michael McNair-Wilson: Will my right hon. Friend say something more about the shape of the session? Does he see its purpose as being to deal with particular hot-spots around the world or to try to take a global view of disarmament?

Mr. Hurd: Certainly the second. The preparations are still continuing. We have tabled with some of our friends a draft programme for comprehensive disarmament that we think is realistic. We are discussing it with others who have other ideas and we hope that it will be possible to reach agreement at the special session on a framework that will act as a spur and a stimulus to the different negotiations on arms control and disarmament that are taking place and are in prospect.

Mr. George Robertson: The House will commend the Prime Minister on her decision personally to attend the United Nations special session, although it may have some reservations about the fact that during the five-week session there will be no Forign Office Minister in attendance with the right hon. Lady. The House will hope that she will use the occasion, not for unhelpful rhetoric, but for exerting some political muscle to beak the deadlock that has been reached in disarmament negotiations. Will Her Majesty's Government use some of their influence to try to avoid the complications that will arise from the clash of dates between the Geneva summit and the United Nations special session, bearing in mind the widespread feeling on the issue?

Mr. Hurd: As I have tried to make clear, there is no clash. We intend to take a lively part in the special session. It will not be a negotiating occasion but it might give a stimulus to those who are doing the negotiating in the different places where that is happening.

Mr. Chapman: While I welcome my right hon. Friend's presence at this most important conference, can my right hon. Friend assure the House that the Government will bring forward fresh initiatives to encourage and promote multilateral disarmament? Will he ensure that the public are kept in touch? He must recognise that there is deep anxiety to see these initiatives stepped up.

Mr. Hurd: I agree with my hon. Friend. We take initiatives where we think that it is sensible and useful to do so. We have done so recently in respect of chemical weapons. My hon. Friend is right about public information. We have recently published what I think is a reasonable pamphlet entitled "Peace and Disarmament". We shall do our best in the coming months to take our full part in public discussion.

Nicaragua

Mr. Eastham: asked the Lord Privy Seal if he has had any recent discussions with the Foreign Minister of France concerning the aid given and the policies pursued by France in respect of Nicaragua; and if he will make a statement.

Mr. Luce: No, Sir, but my right hon. and noble Friend has recently had discussions with the French Foreign Minister, M. Cheysson, on many issues, including Central America.

Mr. Eastham: Is it not a fact that the French Government are recognising the freedom and independence of the Nicaraguans? Bearing in mind the overwhelming sympathy of the British people towards the Nicaraguans and their independence, is it not about time that the Government gave a lead to all the super Powers in urging them to allow the Nicaraguan's to have the freedom to which they are entitled?

Mr. Luce: We can all say that we want to see freedom and independence in that part of the world. The Government have noted with some concern that the Nicaraguan Government have decided to suspend all civil rights and to declare a state of emergency. We regret that very much. There are some indications that the Nicaraguan Government are not entirely independent, as the hon. Gentleman suggests. The actions that they are taking against the Miskito Indians causes great concern to those of us who have respect for human rights, as I am sure the entire House has. We want to encourage the consolidation of a pluralist society in Nicaragua. I have had two meetings this month with the Nicaraguan ambassador. The discussions have been extremely useful.

Mr. Peter Bottomley: Has my hon. Friend heard, through the press or direct from the Nicaraguans, whether they plan to bring their proposed elections forward from 1985? If they are to continue to have a plural society, it will be helpful to have elections so that people with different political views can be elected to a Nicaraguan Assembly.

Mr. Luce: I agree entirely with my hon. Friend. I think that the outside world would be encouraged if there were evidence that the Nicaraguans were prepared to hold early elections and thereby demonstrated their wish to have a pluralist society. This is something that we have urged upon them in our recent discussions.

Mr. Healey: Is the hon. Gentleman aware that on many occasions the United States Administration has made threats of direct intervention in the affairs of Nicaragua? It has been widely reported and not denied that the CIA has had a plan accepted costing $19 million for destabilisation of the regime in Nicaragua. As the United States has twice this century intervened by military force in Nicaragua, it is immensely important that Nicaragua should know that it has friends other than those in the Communist world who are prepared to support its desire for independence.

Mr. Luce: As was said in an earlier debate, the Government have no knowledge of the use of any particular United States funds through the CIA. We have also noticed that on a "Panorama" programme earlier this week ambassador Bosworth of the United States denied that the United States had any intention of military


intervention, or the use of troops. We should take note of the fact that Secretary of State Haig has repeatedly said that the United States wants to foster and encourage democracy in that part of the world.

Mr. Healey: Is the Minister aware that many of us have had opportunities to talk to Mr. Bosworth on this issue, and while it may be the case that the United States does not intend to send its troops to Nicaragua, it has made threats, widely reported in the American press, and supported by members of Congress and the Senate, of an organised campaign to destabilise the Government in Nicaragua? Does the hon. Gentleman not know that Nicaraguan terrorists are being trained in the United States for intervention inside Nicaragua? That, too, was recorded in the "Panorama" programme to which the right hon. Gentleman referred.

Mr. Luce: I do not think that the right hon. Gentleman and I disagree. Any actions that are taken by countries interested in stability, whether in Nicaragua or any other part of central America, would be to help to do what we can to foster greater stability. That is our objective. All I was saying was that I had noted, and I hope that the right hon. Gentleman has noted, that the United States Government's objective is to try to foster and encourage democratic Government. That is something with which we ought to agree rather than disagree.

Mr. Eldon Griffiths: While no one in the House can doubt that the replacement of the Somoza regime by the Sandanista revolution was a step forward, does my hon. Friend agree that the injection of French weapons into the situation is not helpful? Does he accept that there is grave disappointment in Nicaragua about a Government who have allowed their revolution, which had much support, to go sour in the suppression of civil rights, to bring about the militarisation of the country and the use of Nicaragua as a base for the destabilisation of surrounding countries?

Mr. Luce: The British Government do not believe that it would be helpful to sell arms to Nicaragua. We condemn and criticise the suspension of civil rights as a result of the recent declaration of emergency and we express concern about the substantial build-up of the military in Nicaragua beyond any requirement for their own defence purposes.
However, it is the desire of Her Majesty's Government to do whatever is possible to encourage and foster stability. We are in touch with Governments such as the Mexican Government and other Governments who play an important role in that part of the world.

Cyprus

Mr. Norman Atkinson: asked the Lord Privy Seal what progress there has been in the intercommunal talks in Cyprus since his reply to the hon. Member for Tooting (Mr. Cox) on 3 March, Official Report, c. 182.

Mr. Thomas Cox: asked the Lord Privy Seal what further discussions in the intercommunal talks on the future of Cyprus have taken place since his reply to the hon. Member for Tooting (Mr. Cox) on 3 March, Official Report, c. 182.

The Lord Privy Seal (Mr. Humphrey Atkins): There have been regular meetings throughout March. Some progress has reportedly been made towards an agreed statement making use of the evaluation tabled by the

United Nations Secretary General in November. I understand that, at a meeting on 17 March, the Secretary General's representative opened a new phase in the discussion, to deal with freedom of settlement, movement and property.

Mr. Atkinson: Is the Lord Privy Seal aware that international opinion generally agrees that intercommunal talks have reached a dead-end? Is he also aware that when President Kyprianou visits Rome next week for discussions with the Secretary General of the United Nations it will be put to the latter that the opinion of Cypriots is that they can make no further progress. Under these circumstances, and knowing that the Turkish Government have no intention, even after eight years' occupancy, of withdrawing their troops from Cyprus, has not the time come for the British Government to intervene if any progress is to be made?

Mr. Atkins: It may be the hon. Gentleman's view that the talks have come to an end, but it is not the view of those taking part in the talks. In particular, a new phase of discussion has been opened by Mr. Gobbi. I do not know what President Kyprianou will tell the Secretary General of the United Nations next month when they meet. However, the talks are continuing. It is our view that they form the best basis for progress, and we wish to do everything that we can to support them.

Mr. Cox: Is the right hon. Gentleman aware that the patience of the Greek Cypriot people is fast running out in their attempts to reach a possible honourable settlement? In view of the Minister's reply to my hon. Friend does he not think that the British Government should be putting pressure on the Turkish Administration to remove some of the many thousands of troops that they have on Cyprus? When will the right hon. Gentleman, or his right hon. and noble Friend the Foreign Secretary, visit Cyprus so that he can see at first hand the tragedy on the island?

Mr. Atkins: With regard to the second part of the hon. Gentleman's question, Mr. Rolandis will be coming to see me in about four weeks' time. That will be a useful start, and I hope to go to Cyprus shortly afterwards. With regard to the Greek Cypriots' patience running out, I should draw the hon. Gentleman's attention to the fact that they are still engaged in talks with Mr. Gobbi.

Mr. Rhodes James: Is my right hon. Friend aware that the intercommunal talks have now been going on for 15 years and that the results have been wholly ineffectual? How long are we and the people of Cyprus expected to continue with this form of negotiation? It has been fruitless up till now, which should surely lead us to the belief that a new initiative is required.

Mr. Atkins: It has been made clear to us that a new initiative from us would not be welcome. My hon. Friend speaks of the talks having gone on for a long time. They have, but the evaluation tabled by the United Nations is only four months old.

Mr. Squire: Will my right hon. Friend recognise how welcome his statement about his proposed visit to Cyprus will be to many people on both sides of the House? When he is in Cyprus, will he take the opportunity to listen to both sides of the community, as he will find that what links them is much greater than what separates them? Will he continue to bear in mind the fact that despite the apparent


relative non-success of the United Nations negotiations Britain still retains a responsibility as a co-guarantor and should take a major role in settling once and for all the affairs of this island?

Mr. Luce: We shall not forget our role as co-guarantor, but we believe that it is our duty to make our best efforts to further the efforts of the United Nations. Both President Kyprianou and Mr. Denktash are meeting the Secretary General next month, and I hope that this will prove that this is the way forward.

El Salvador

Mr. Alton: asked the Lord Privy Seal whether he will make a statement on the situation in El Salvador.

Mr. Luce: The results of the elections are not yet final. No one party appears to have an overall majority.
As the House knows, Her Majesty's Government take the view that if El Salvador is to achieve peace and stability, there is a need for peaceful rather than violent change and full respect for human rights and further progress on social and economic reform.

Mr. Alton: In view of the legitimate concern of Her Majesty's Government that there should be a concerted European response to the problems of Poland, Afghanistan and the Middle East, why do Her Majesty's Government not take the same view when it comes to a response to the problems of Central America? In particular, will the Minister say why we fell out of line with our European neighbours on the vote on human rights in the United Nations on 16 December, and why we broke the line on the question of observers?

Mr. Luce: It is right and important that the members of the European Community should continue to exchange views about Central Latin America. This will become increasingly important in the forthcoming weeks. What really matters if peace and stability are to be achieved in that part of the world is that the important nations such as Mexico, Venezuela and others, as well as the democratic nations such as Costa Rica, Honduras and so on should play a key role. It is their region, they have important views to express, and it is important to keep in touch with them.

Mr. Bowen Wells: May I congratulate my hon. Friend on having the wisdom to stick by his decision to send observers to the El Salvador elections so that the House may be informed independently of the nature of those elections and their outcome? With the apparent result of the elections, will my hon. Friend and the Government now support a negotiated settlement with all parties interested in the El Salvador problem?

Mr. Luce: We shall do whatever we can in our own way to try to foster peaceful change, social reform and respect for human rights. I was due to leave for Mexico tonight for discussions with the Mexican Government. I have decided to postpone my visit temporarily, but it will be helpful for us to have an exchange with them.

Israel

Mr. David Watkins: asked the Lord Privy Seal if he will raise at the United Nations Israeli conduct in the occupied territories, which is contrary to internationally accepted conduct on the part of occupying powers.

Mr. Hurd: The United Nations Security Council is discussing the situation in the occupied territories at this moment in response to a Jordanian request. We have made clear our grave concern at recent developments on the West Bank, including the dismissal of the three mayors, and our hopes for an end to the violence which can only harm the prospects for a settlement.

Mr. Watkins: In addition to those points, and recognising that many matters could be so raised, will the Government make a special point of raising the forcible and illegal closure of Bir Zeit university with the harassment of staff and students, which has now occurred for the fifth time in five years?

Mr. Hurd: The action at Bir Zeit is one of the factors, although not the only one, that has built up this unfortunate situation. In New York, we are now trying to reach agreement on a resolution that can be carried by the Security Council which might help remedy this problem.

Mr. Hicks: Does my hon. Friend agree that we are concerned not only about the closure of Bir Zeit university but about the closure of many other university and education establishments? Surely it is the wider aspect as well as the specific one that the Government should be drawing to the attention of the United Nations in the context of any resolution.

Mr. Hurd: As I tried to explain in answer to my hon. and learned Friend the Member for Burton (Mr. Lawrence), we believe that many elements have built up this explosive situation on the West Bank, and through the Security Council and by other means we are trying to see what we can do to reduce the temperature.

Dr. M. S. Miller: What is the internationally accepted conduct of occupying powers?

Mr. Hurd: The hon. Gentleman will be familiar with the Geneva convention, which deals with the rights and practices open to an occupying power when it militarily occupies another territory. We believe that some of the activities of the Israeli military Government in recent months have run counter to that. We also believe that it would be sensible for all concerned in the area to accept resolution No. 242, which calls for withdrawal from occupied territories, and to accept the right of Israel to exist in security.

Nuclear Weapons (Geneva Talks)

Mr. Michael McNair-Wilson: asked the Lord Privy Seal if he will give a progress report on the Geneva talks aimed at limiting the number of intermediate nuclear weapons held by the Soviet bloc and the West.

Mr. Hurd: In the first round of negotiations, which concluded on 16 March, the United States tabled a draft treaty embodying NATO's proposal to ban all the land-based intermediate range missiles of most concern to each side. The Soviet Union proposed limited reductions which would allow 300 such systems in Europe, but which would permit NATO no equivalent deployment. The second round of these negotiations will begin in May.

Mr. McNair-Wilson: Will NATO's special consultative group again be brought into action to consider the next stage of the negotiations? In my hon. Friend's view, is the zero option still on the table or is it a dead letter?

Mr. Hurd: The special consultative group, and the whole system of consultation within NATO, and between the United States and its allies, is working well in this area. The zero option remains on the table. It is embodied in a draft treaty. It is much the most radical and peaceable proposal on this subject that has been put forward by anyone, and we hope that everyone in this country concerned with the process of disarmament and arms control will support the zero option and do what they can to persuade everyone else to do the same.

Mr. Healey: While I welcome the Government's attachment to the zero option, does the hon. Gentleman agree that the planned Polaris D5 force will have the same number of warheads as the current SS20 force of the Soviet Union and, therefore, is difficult to ignore in any negotiation on European-based nuclear missiles?

Mr. Hurd: Not only is the right hon. Gentleman confusing Polaris with Trident, but he is also confusing intermediate and strategic weapons. We hope that it will soon be possible also to start negotiations on strategic weapons. We believe that that will be an important part of the process of seeking disarmament through balanced and verifiable measures.

Mr. Healey: I welcome that statement. Does it imply that the Government are prepared to throw the Trident D5 force into the START negotiations?

Mr. Hurd: The right hon. Gentleman knows perfectly well that that is nonsense.

Mr. Whitney: Does my right hon. Friend agree that the right hon. Member for Leeds, East (Mr. Healey) seems to be ignoring the fact that the D5 option is related to the mid-1990's and that there are presently about 300 SS20's in position?

Mr. Hurd: My hon. Friend is right. The House discussed this matter in great detail on Monday. The question of my hon. Friend the Member for Newbury (Mr. McNair-Wilson) related to the intermediate force negotiations now proceeding in Geneva. Surely it must be sensible to see whether we can make progress in this area. For that purpose, the United States, on behalf of the alliance, has made a very radical and worthwhile proposal.

Mr. Newens: Should the right hon. Gentleman not request the United States to defer deployment of cruise missiles in Europe at the end of next year if there is any possibility of agreement being reached? If that decision is not made clear at this stage, are we not presenting the conference with a fait accompli?

Mr. Hurd: It is up to the Russians. They have presented the alliance with a fait accompli by deploying the SS20s week-by-week in this period. If they now not only freeze that but are prepared to do away with this type of weapon, of course there will be no need for cruise and Pershing. That has been clear since December 1979.

EUROPEAN COMMUNITY

Mr. Speaker: Mr. Cryer. Question No. 50.

Mr. Cryer: I shall not ask the question, Mr. Speaker, because I hope to catch your eye to put a supplementary question on the statement to be made later by the Prime Minister.

Mr. Speaker: That has been done before and it usually works.

European Commission (British Nationals)

Sir Anthony Meyer: asked the Lord Privy Seal if he will make representations to the President of the European Commission about the situation whereby fewer British nationals are employed by the Commission at all grades above A7 than nationals from the Federal Republic of Germany, France and Italy.

Mr. Humphrey Atkins: I raised the problem of British under-representation in the Commission services, which in fact applies only to certain levels, with the President of the Commission when I called on him in October last year, and wrote subsequently to the Commissioner responsible for personnel matters. Since then we have been in frequent touch with those concerned in the Commission at many levels, most recently with Mr. Pisani, Commissioner for Development, when he was in London on 16 March. The Commission recognises the existence of the problem and is taking steps, with our encouragement, to redress the position, for example through the open competition now in progress.

Sir Anthony Meyer: As there is now no reasonable doubt about the permanence of our membership of the EEC, should not British participation in the institutions of the Commission reflect our size and importance? Is it not absurd that at every level, except the top, the number of British civil servants in Brussels is not much more than half that of France, Italy and Germany? Is there a shortage of British applicants for those important jobs?

Mr. Atkins: There is no shortage of applicants and agree that our nationals are under-represented. That is the point that I made to the President and to Mr. Pisani. They recognised the problem, which is not confined to Britain. Other more recently joined nations have the same problem and they are taking steps to set it right. That is a slow process, because vacancies do not occur all the time.

Mr. Heffer: Can the Lord Privy Seal give us more. information about whether British people are applying for the jobs? Is there not also the problem that top civil servants employed by the British Government in Brussels are paid more than those who are employed by the Commission? The Commission people are overpaid, but we pay our people, for example, £36,000 as against £32,800. Is it not time that the rates were brought into line and the overpayment reduced all round?

Mr. Atkins: The principle of the rate for the job should be applied throughout the Commission. I can tell the hon. Gentleman that there is no shortage of British applicants.

Mr. Michael Shaw: In a number of areas, especially industry and commerce, do not British interests sometimes lie importantly with Brussels? If so, is it not even more important that Britons should hold a fair share of responsible posts within the Commission?

Mr. Atkins: Yes, Sir. That is the purpose of our representations, which are slowly having an effect.

Mr. Arthur Lewis: Has this not, unfortunately, gone on for some years? Will the Lord Privy Seal have a word with the previous President, who has attended the House


only when being introduced, to see whether he has any suggestions for saving British taxpayers' money and helping the British Government?

Mr. Atkins: It would be more profitable to have a word with the present President.

Council of Ministers (Meetings)

Mr. Spearing: asked the Lord Privy Seal what additional meetings have been arranged by the Council of Ministers of the European Economic Community for the months of April or May; and for what purposes.

Mr. Humphrey Atkins: The forecast of business for the month of April was placed in the Library of the House on 29 March. In May it is expected that there will be meetings of the Agriculture, Steel, Social Affairs, Finance, Fiscal, Foreign Affairs and Energy Councils. As I told the House on 24 March, Foreign Ministers are to meet on 3 April to carry forward their discussions on the mandate.

Mr. Spearing: Will the Lord Privy Seal confirm that it is the Government's intention that, whatever arithmetical agreement is reached, there will be a review clause at the end of the determined period? If so, is it satisfactory that we must renew our contribution to the EEC on a lease every four years?

Mr. Atkins: We believe that a settlement of the problem should be for a period of five years, or more if we can get it. However, I agree that a review at the end of whatever period is determined is essential.

Mr. Body: To what extent can I pass on to my constituents who are engaged in fishing an assurance from my right hon. Friend that something will be resolved definitely in the next nine months to protect their interests and prevent them from losing their livelihood by the end of that period?

Mr. Atkins: I hope that the matter will be resolved. As my hon. Friend knows, we are awaiting the Commission's proposals on the total allowable catches and quotas, which I hope will be forthcoming soon.

Mr. Hooley: Will the Government give an unequivocal assurance that there will be no question of further cutting Britain's capacity to make steel at the proposed Steel Council meeting?

Mr. Atkins: No, Sir, that is not our intention.

Reform and Structuring

Mr. Teddy Taylor: asked the Lord Privy Seal what propress has been made in the negotiations designed to reform the structure and policies of the European Economic Community since his reply to the hon. Member for Southend, East on 3 March, Official Report, c. 188.

Mr. Humphrey Atkins: The Foreign Affairs Council devoted 23 March to a detailed discussion of the budget problem, the outcome of which I reported to the House on 24 March. The subject was further considered at the European Council and my right hon. Friend the Prime Minister will be reporting on this shortly. Foreign Ministers will meet again on 3 April and will take as a basis for their discussion the suggestions that have been

put forward by the Presidents of the Council and the Commission concerning the method of dealing with the United Kingdom's budgetary problem.

Mr. Taylor: As about two-thirds of the total CAP expenditure was concerned with disposing of surplus foodstuffs to Russia and elsewhere, as most Common Market countries—including Britain—are finding ways of evading the CAP, and as the CAP is the basis of the continuing British budgetary problem, is my right hon. Friend at least willing to discuss with his colleagues in Europe the possibility of scrapping the CAP so that we can resolve many problems and begin to co-operate on matters in which we have common interests?

Mr. Atkins: As my hon. Friend knows, our aim is not to scrap the CAP but to reform it. I agree with him that one reform that is needed is that not so much should be spent on producing goods in surplus.

Mr. Haselhurst: To what extent does my right hon. Friend anticipate that the likely accession of Spain and Portugal will assist the process of reform on which our minds are set?

Mr. Atkins: Before Spain and Portugal accede, we should have solved our immediate problems, because it would not be in the interests of the Community to enlarge without solving those problems.

Policy Co-ordination

Mr. Dykes: asked the Lord Privy Seal if he plans to pay an official visit to the European Economic Community Commission in Brussels to discuss policy coordination matters.

Mr. Humphrey Atkins: I paid an official visit to the Commission in October last year. I have no immediate plans for another formal visit, although I regularly meet the President and other members of the Commission in the course of normal Community business.

Mr. Dykes: Although a fair and proper resolution of our budgetary problems is essential and must be obtained as soon as possible, does my right hon. Friend not agree that it is remarkable that even Labour Party spokesmen accept that if we scrap CAP aid our domestic farm prices support system would cost over £2 billion?

Mr. Atkins: A return to national aid for agriculture would be very expensive.

Mr. Richard Shepherd: Will my right hon. Friend advise the House whether, as of today, we have received full reimbursement of the moneys due under last year's European budget?

Mr. Atkins: We have received nearly all our money. I believe that a small amount remains to be paid, but we should receive it soon.

Mr. Heffer: Without anticipating what the right hon. Lady the Prime Minister will say, can the Lord Privy Seal tell the House whether the Government are turning their attention formally to what is likely to happen if the French dig in their heels, if we do not reach an agreement on the budget, and if—rightly—we do not agree to the farm price increases without an agreement on the budget? What are the Government likely to do? Is he aware that so long as


the Government stand firm, the Opposition will support them? We do not want any backing down whatever on this question.

Mr. Atkins: I take note of what the hon. Gentleman says, and I am always grateful for his support. I shall not give him details of any plans that we might have in mind if there were a total breakdown in the discussions, because it is our hope and belief that there will not be such a breakdown.

Reform and Structuring

Mr. Skinner: asked the Lord Privy Seal whether, in view of his statement in the Official Report on 3 March, c. 267, he has anything further to add on British budget contributions; and if he will make a statement.

Mr. Humphrey Atkins: I refer the hon. Member to my reply earlier today to my hon. Friend the Member for Southend, East (Mr. Taylor).

Mr. Skinner: Is the Minister aware that when Britain entered the Common Market we were told that, irrespective of budget contributions, unemployment would be reduced? Throughout the five-year transitional period, when we were paying less than the others, we were told that that would also assist Britain to reduce unemployment. During the referendum campaign in 1975 we were also told that, whatever the budget contribution, unemployment would be reduced. We were also told that the refund that has just been mentioned would help Britain to bring down the level of unemployment. Is it not a fact that the Common Market, coupled with this Tory Government, is an unmitigated disaster, whatever the budget contribution?

Mr. Atkins: It seems to have escaped the hon. Gentleman's attention that countries outside the Community also suffer from unemployment.

Mr. Teddy Taylor: Will the Lord Privy Seal at least remind his colleagues in Europe that since we joined the EEC we have paid net more than £3,000 million, or more than £1 million every day of the week, including Saturdays and Sundays?

Mr. Atkins: My hon. Friend has used those figures before. I remind him that our total net contribution last year was £55 million. That is an improvement, and the present discussions taking place in the Community are designed to secure the position for the future.

Mr. Squire: Does my right hon. Friend think that the nature of questions tabled by the Opposition in any way reflects their disappointment that the Labour Government were unable to achieve what the Conservative Government have manifestly done—secure a major reduction in the amount that we pay to the EEC?

Mr. Atkins: I am sure that it does, and the Labour Party has a great deal about which to be disappointed

Mr. Cryer: As the right hon. Gentleman is so scathing about the alternative of the guaranteed deficiency payments system that Britain operated before making such massive contributions to the CAP, will he say what calculations have been made by his Department on the possibility of again embarking upon a guaranteed deficiency payments system?

Mr. Atkins: No. Because our efforts at present are designed to reform the CAP, and we believe that we shall be successful.

European Commission (President's Interview)

Mr. Arthur Lewis: asked the Lord Privy Seal whether he will obtain a transcript of the interview with M. Gaston Thorn, President of the EEC Commission, during which he made comments upon the Prime Minister and Her Majesty's Government; and whether he will publish this in the Official Report.

Mr. Humphrey Atkins: No, Sir. The hon. Member will have noted that the Commission has issued a statement which makes it clear that Mr. Thorn was misreported. I understand that the radio station concerned has since confirmed this.

Mr. Lewis: The original statement contained some rude and offensive remarks about our Prime Minister. That is now supposed to have been withdrawn. Why cannot we be told what the original statement said? If there was a correction, why should we not be told the facts? We have not yet seen the official details. The Minister has them. Why cannot he place them in the Library?

Mr. Atkins: I did not say that the statement had been withdrawn. It could not have been withdrawn, because it was never made. Mr. Thorn's office and the radio station have confirmed that it was misreported. If the hon Gentleman wishes to see precisely what Mr. Thorn did say, I shall arrange for that information to be made available.

Mr. Teddy Taylor: As Mr. Thorn is obviously embarrassed about this, will my right hon. Friend seek his. help and advice to establish what I am unable to establish—the view of the Commission and the EEC about our legal rights to keep EEC fishing vessels out of British waters after 31 December this year?

Mr. Atkins: I do not think that matter arises from this question, but I shall pursue my hon. Friend's point.

European Council Meeting

The Prime Minister, (Mrs. Margaret Thatcher): With permission, Mr. Speaker, I will make a statement on the meeting of the European Council in Brussels on 29 and 30 March, which I attended with my noble Friend the Foreign and Commonwealth Secretary.
At the end of the meeting, the President of the Council issued a statement of his conclusions on the economic and social situation and the 30 May mandate. Agreed texts on political co-operation were also released. I have placed copies of these documents in the Library.
The Council devoted most of its meeting on this occasion to the economic and social situation, both within the Community and in the world at large. We agreed that, although the specific characteristic of the situation in each member State might call for varying policies, all the member States had the same interest in combating unemployment and restoring economic growth, while preserving monetary stability and ensuring the competitiveness of their economies. The council expressed its concern at the level of productive investment in Europe, especially in the industries of the future, and agreed that the Community and the member States would take whatever steps were open to them to improve that level, while recognising that an increase in investment would mean a reduction in consumption.
During our discussions, I laid particular stress on the need to complete the Common Market in the services sector. We have made disappointingly little headway with the liberalisation of services such as insurance and air transport.
We also discussed the role that the Community can play in the development of information technology and the vital contribution that small businesses can make to the provision of new jobs.
On youth unemployment, which was a matter of special concern, we agreed that each member State would strive to ensure over the next five years that all young persons entering the labour market for the first time would receive vocational training or intitial work experience.
In our discussion of external policies, the Council looked forward to the Versailles economic summit in June. We agreed that our aim at that summit should be to encourage increased co-operation between the major industrial countries. In particular, we agreed that the persistence of high real interest rates in the international markets, combined with inadequate economic activity, was leading to a significant reduction in productive investment and made unemployment worse because of the squeeze on company liquidity and profits.
The Council urged Japan to open its market so as to integrate it more fully into international trade. We also urged Japan to follow an economic, commercial, monetary and exchange rate policy which was more compatible with the balance of responsibilities to be borne by the whole of the industrialised world, thereby contributing to economic recovery.
On the mandate, we had a relatively brief discussion in the light of the recent suggestions put forward by M. Tindemans and M. Thorn. We and most other member States were prepared to accept these proposals as a basis for negotiation. I emphasised the need for a solution to the United Kingdom budget problem which gave us a fair

scale of compensation, which was sufficiently flexible to take account of either an improvement or a deterioration in the underlying situation and which would last for a substantial period.
I underlined the conclusion we had all reached in London in November that decisions on all aspects of the mandate must be taken together, that is to say decisions on the budget, the common agricultural policy and the industrial and social affairs of the Community. At this point the President of France stated that he could not accept the Thorn—Tindemans proposals as a basis for discussion.
As the Presidential conclusions indicate, foreign affairs Ministers have been asked to do all in their power to secure early decisions. The Ministers will meet in Luxembourg on 3 April.
The Council also had a very full political agenda. We spoke about transatlantic relations and welcomed the very warm message sent by President Reagan on the 25th anniversary of the European Community.
We discussed the economic and commercial state of East-West relations, in the light of the significant role played by Community trade with the Soviet Union and Eastern Europe. We agreed that these matters, including the related credit problems, should be studied further by the European Community and member States in close consultation with other members of OECD.
We also discussed the situation in Poland, where martial law continues in force, many thousands of persons are detained, and a dialogue with the Church and with Solidarity is still suspended.
We agreed that it was essential not to lose sight of the tragic sufferings of Afghanistan. There can be no solution except on the basis which two-thirds of the United Nations have endorsed, and which the Soviet Union alone has so far frustrated.
On Central America, our main conclusion was the need to support any intiative that could bring an end to the violence, and we noted proposals by Mexico and Honduras, among others. We agreed that economic aid given to Central America and the Caribbean should be coordinated and, where possible, increased.
This was not the moment for a major statement of policy on the Middle East. We expressed grave concern about the situation in the area, especially on the West Bank. The Council welcomed, as a contribution to the achievement of a just and lasting peace in the Middle East, the participation of four member states in the Sinai multinational force. My noble Friend the Foreign and Commonwealth Secretary is paying an official visit to Israel today and tomorrow.
This was a very busy Council in its discussion, both of Community affairs and of international problems. While we were all disappointed and surprised at the attitude of the French Government on the mandate, the same realism will have to be applied to decisions on those problems as was applied in the wider discussions during this European Council.

Mr. Michael Foot: First, I shall refer to what the right hon. Lady said about the mandate and discussions on the budget which were, of course, briefly referred to in the communiqué.
The right hon. Lady referred to her capacity for stubbornness in these matters. We all recognise that she has that capacity. As long as she is stubborn in defence of


the legitimate interests of the British people, she will have some support from the Opposition. [HON. MEMBERS: "Some?"] It will be considerable, and much more generous support than ever my right hon. Friend the Member for Deptford (Mr. Silkin) received when he was also defending the legitimate interests of the British people in discussions at the European council.
The right hon. Lady also has no difficulty about a mandate from the House on this question. The mandate was given to her on two or three occasions. She should demand a zero net contribution. That was the proposal—indeed, demand—in the resolution passed in the House on 16 July 1979. That still stands as the opinion of the House of Commons and is the view that we believe must be translated into action.
The right hon. Lady said that she was surprised at some of the attitudes she had heard in the Council over the past day or two. She cannot have taken account of the full debates in the House, when many hon. Members prophesised that we would have to face these difficulties. That is a reason why more and more people all over the country are looking to see whether it would be better to try to settle some of these important matters with our allies, not in the Common Market context, but in an altogether different context.
An important aspect of the discussion was the general economic situation. The right hon. Lady referred to the necessity for a much bigger investment programme, but she is reported as saying at her press conference that there was a recognition that job-creating investment could be achieved only through lower consumption—through either increased taxation or wage restraint. We know that that may be her view, but that is one of the views that is impeding economic expansion in Europe. Those views might apply to full employment, but we are far from full employment at present. There are not merely 3 million unemployed in Great Britain but nearly 11 million unemployed in the Community countries as a whole. What is required is a much bigger concerted expansion and investment programme than anything that the right hon. Lady has been prepared to contemplate. We can understand how she fails to advocate those policies in Europe when she is not advocating them in Britain.
Would the right hon. Lady be prepared to consider a more open, adventurous and ambitious policy on those matters in preparation for the Versailles economic summit? The world is suffering from appalling unemployment. Unemployment figures are rising on both sides of the Atlantic. It would be of great advantage to the world if the Versailles economic summit could be turned into a success, but it would be a disaster for the world if nothing more were offered at the end of the economic summit than what was offered at the end of the meeting that the right hon. Lady has attended over the past few days. Nothing concrete or expansive has been proposed. Nothing of that nature appears in the communiqué. It does not appear that any solution comparable to the needs of the situation has been proposed by the Government in the discussions. [HON. MEMBERS: "Too long".] The right hon. Lady is still answerable to the House on the economic questions. We want her to explain why she has not been prepared to advocate in Brussels any proposals that would deal with large-scale unemployment.
I do not propose to cover all the general political questions to which the right hon. Lady referred, important though they are, because we wish to debate many of the

matters such as Poland and Afghanistan in the House. However, there is one immediate question that I wish to ask the right hon. Lady. I am glad that at the meeting there were discussions on El Salvador.

Mr. Neville Sandelson: What about Afghanistan?

Mr. Foot: Yes, I have mentioned Afghanistan on many occasions.
With regard to El Salvador, I am glad to see that the right hon. Lady says in her communiqué that she has joined others in Europe in welcoming any new initiative. That is a considerable advance on what was said by the Government in our debate a few weeks ago. We urged the Government that they should accept and act upon the new initiative. [Interruption.] I am referring to what the right hon. Lady said in her communiqué. We urged that the Government should try to act on the basis of the new initiative for mediation from Mexico. The right hon. Lady and the Government refused to do that. Instead of doing that, they supported the gruesome fiasco of the election in El Salvador.
We are glad to see that the right hon. Lady has now been prepared to join some other countries in Europe in trying to seek a more intelligent way of escaping from the horrific war in El Salvador. We hope that the right hon. Lady will be able to build upon the proposals that she made, which have been belatedly agreed with some of her allies in Europe.

The Prime Minister: With regard to the mandate, I have made it clear that Britain is prepared to make a modest net contribution to the budget of the European Community. I think that that is reasonable and fair. During the time of the right hon. Gentleman's Government, there were occasions when a modest net contribution was made. This year we shall make a modest net contribution, but only last week some £813 million of refunds were returned to this country in respect of last year's budget. More will be coming. That is our money, which the previous Government would have left us to pay to Europe but for our negotiations. They talked a lot about it but did absolutely nothing to negotiate on the mandate.
If we do not succeed in getting an agreement on the whole mandate this year, the arrangement that we made at the last negotiations will persist through this year and would apply in respect of refunds that we should receive in the first quarter of next year. Nevertheless, we regard it as urgent to achieve a full and satisfactory solution, but it has to be on all three parts of the mandate at the same time—the budget, the common agricultural policy and the industrial and social affairs policies of the Community. I am afraid that the decision not to go ahead on the Thorn-Tindemans formula will hold up agreement on all three parts of the mandate, whereas we wished to come to a conclusion.
With regard to the investment programme, we were realistic about solutions to the unemployment problem. The right hon. Gentleman is looking for a magic wand in the absence of any practical policy put forward by his party. In a prolonged discussion, we said that all countries were affected by severe unemployment. In some countries unemployment is rising faster than in this country. There is no magic wand. If we are to have increased investment, there must be reduced consumption. The only alternative would be substantially increased interest rates. We all


agreed how important it was to keep down interest rates. To pursue any policy that would increase interest rates would be the best way of aborting any early economic recovery.
With regard to Central America, we have welcomed before the initiative of the Nassau group, including Mexico and Honduras. Unlike the right hon. Gentleman, we also welcome elections in El Salvador.

Mr. Doug Hoyle: Farcical.

The Prime Minister: I do not understand why the right hon. Member for Ebbw Vale (Mr. Foot) is so reluctant to have the democratic process in that country and why he is so reluctant to urge the guerrillas to drop the bullet and take on the ballot instead, as we did in Rhodesia. We are glad that many other countries took the same view as we did about elections. The Pope was much in favour of them. A number of countries have sent observers to El Salvador to see the elections. What confounds the right hon. Gentleman is that, in spite of the difficulties, the turn-out in the El Salvador elections was greater than anyone ever thought it would be.

Mr. Foot: The right hon. Lady referred to a reluctance to have elections in El Salvador. Why does she connive at denying to the people of El Salvador what the British Parliament and Government insisted on for Zimbabwe, which was that the fighting had to stop before the elections took place? The elections in El Salvador are a mockery of anything that can be called democracy. For the right hon. Lady to lend the reputation of this country to those elections is to debase the name of democracy.
The right hon. Lady seems to be departing from some of our democratic traditions. With regard to the mandate, I know that some hon. Members do not care about the resolutions that are passed through the House. We do. The House of Commons has passed a resolution on two occasions supporting the zero contribution. The right hon. Lady has departed from that already in her replies today. She is talking of a modest net contribution. Why did she not put that proposal before the House of Commons? Let her put a motion on the Order Paper of the Council amending the very resolution to which she agreed and for which she invited general support in the House. I suggest that she should do that before she agrees to any modest net contribution.
What about a permanent solution of this problem? The right hon. Lady seems to have lost sight of that altogether. In spite of the stubbornness that she preached at her Press conference, it seems to me that she is yielding already. I ask the right hon. Lady to go back to Brussels and tell them of the resolution that was unanimously passed by the House.

The Prime Minister: Perhaps it has escaped the right hon. Gentleman's notice that El Salvador is a wholly independent country. Rhodesia was a British colony, which put us in charge of the elections which took place there. I may say that, alas, all the fighting did not stop before the elections took place there. I am glad that the right hon. Gentleman is very much in favour of past British imperialism.
Had we been left with the contribution formula to the Community from the Labour Government, we should have

paid over£1 billion in net contributions in 1980, and over £1 billion again in 1981. Fortunately, we negotiated a very much better arrangement than the Labour Government had ever been able to negotiate. They have never liked that and they do not like it now.

Mr. Foot: Is the right hon. Lady aware that the agreement with the EEC, about which she was complaining a few minutes ago, was one to which she herself put her name when she was part of the Government that agreed it?

The Prime Minister: Has the right hon. Gentleman forgotten that his Government re-negotiated it, including some of the Budget provisions?

Mr. J. Enoch Powell: Is the right hon. Lady aware that the mass of people in Britain derive encouragement and hope from reports which say that the Prime Minister is willing to maintain our national interests, whatever toes she may have to tread on, and that she will protect our right to take our own economic decisions on matters which vitally affect Britain?

The Prime Minister: That is the position, and I am grateful to the right hon. Gentleman.

Mr. Peter Bottomley: Will my right hon. Friend first say whether there were discussions about trying to encourage elections in Nicaragua? Can she say what implications there are throughout the economy of Europe and Britain in trying to reduce the level of real interest rates and to increase the economic demand that she was talking about?

The Prime Minister: We did not go into detail about any particular country in Central America. The discussion was about Central America as a whole and we did not discuss Nicaragua in detail.
With regard to reducing real interest rates, in order to do that, we have to get down both inflation and the budget deficit. Countries that have done that have a much lower real interest rate. Countries that have either a high inflation rate or a high deficit tend to have very much higher real interest rates—for example, Ireland, Italy, France and Belgium. There is no magic in the formula. Both inflation and the budget deficit must be kept down.

Mr. Roy Jenkins: rose—

Mr. Dennis Skinner: Mr. Common Market himself.

Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) must not conduct a running commentary from a sedentary position. That will not be tolerated from anyone.

Mr. Jenkins: The right hon. Lady referred to the industries of the future. Was there a useful discussion at the European Council on the hard warning fact that, so far as the micro-electronic industry is concerned, Europe has 30 per cent. of the market and 15 per cent. of the production? If that continues—it will continue unless there is substantial Government and Community intervention—it is a severe warning sign that Europe as a whole will not be a major economic power by the end of the century. [Interruption.]
Secondly, will the Prime Minister bear in mind—

Mr. Sandelson: rose—

Mr. Speaker: Order. I got to my feet because the hon. Member for West Stirlingshire (Mr. Canavan) was shouting below the Gangway and I think that that is exceedingly unfair. This House stands for free speech and we will have it.

Mr. Dennis Canavan: On a point of order—

Mr. Speaker: No point of order arises on that.

Mr. Jenkins: Secondly, will the right hon. Lady bear in mind that she should give her full support for Britain paying a fair contribution and nothing more? A small contribution is inevitable, given the fact that the major part of our aid to the Third world goes through the Community. Therefore, to talk about a nil cost makes a mockery of the position of the right hon. Member for Ebbw Vale (Mr. Foot) vis-a-vis the Third world.
Thirdly—

Mr. Canavan: This is a speech.

Mr. Jenkins: Thirdly, will the right hon. Lady tell us why, in the present circumstances, while nobody wants ill-directed investment, it is essential, particularly on a European basis, that increased well—directed investment should be accompanied by decreased consumption?

The Prime Minister: On the right hon. Gentleman's first point, we did not go into detail about microelectronic industries. He will recollect an occasion when we had a very effective paper before us which set out all the facts and figures which he has mentioned briefly today. We were very much aware that we should co-operate across countries in Europe—from firms in one country to firms in another—if we were to take best advantage of the large market that there is in information technology.
We are also aware that investment on its own is not necessarily good. There has been quite a lot of investment which has not been productive in any way. Therefore, our comments were all directed towards productive investment and to finding the markets of the future.
I am grateful to the right hon. Gentleman for what he said about making a modest net contribution. We must make a modest contribution. We must at least contribute to the administrative costs of the Community.
With regard to what the right hon. Gentleman said about aid to the Third world, he will remember that that is dealt with in a wholly different aspect of the budget. Our aid to the Third world which goes through the European Community is dealt with not on our Common Market budget but within our aid budget.
With regard to the right hon. Gentleman's third point, there was considerable agreement among Chancellor Schmidt, Mr. Spandolini, Mr. van Agt and myself that we had to have increased investment either by increasing taxation so that we could direct it towards that particular end or by asking for reduced wage increases so that we had money available to go towards investment which had not already been used up on wage increases, or it would have meant increasing the borrowing and increasing interest rates. As one of the objectives at the moment is to hold down the deficit—a number of countries are already in difficulty as a result of having pushed it up further—and because we are conscious of the effect of the interest rate both on agriculture and on small businesses, we are not prepared to do anything to push up interest rates.

Several Hon. Members: rose—

Mr. Speaker: Order. I propose to allow questions to run until 4.20 pm, which will give 50 minutes on the statement. I hope that we shall have short questions.

Mr. Teddy Taylor: In view of the concern expressed by the Council of Ministers about Afghanistan, will the Prime Minister say whether any consideration was given to the massive exports of cheap subsidised food to Russia, which broke all records in 1980, and which, according to recent figures, have exceeded that total in the first six months of 1981?

The Prime Minister: We had a brief discussion about the whole commercial relationship between the Community, the Soviet Union and the Eastern bloc, concerning both what we are exporting and the credit policies that we have so far been pursuing. As my hon. Friend knows, those credit policies have led to enormous deficits on the part of the Eastern bloc. Some of them are having difficulty meeting those deficits, even in paying the interest upon them. We have to meet later to consider rescheduling the Polish debts again.
We have set in hand, through the EEC and the member States in consultation with the OECD, a whole study of our commercial relationship with the Eastern bloc, both as between individual countries and the Community as a whole. That will be dealt with in that study.

Mr. Bob Cryer: When the Ministers discussed the deficit with Japan, did they discuss the United Kingdom's deficit with the Common Market, which in 1980, in manufactured and in semi-manufactured goods, amounted to £2 billion, and has cost us many jobs? When we entered the Common Market there was a campaign run by the right hon. Lady's friends called "Jobs for the Boys". That was the claim made for the Common Market—

Mr. Skinner: And Hillhead got one.

Mr. Cryer: It is now clear that the Common Market has not benefited us one iota.

Mr. Skinner: It benefited one person—he got the job.

Mr. Cryer: Will the Prime Minister now accept that we cannot reform the Common Market, as the negotiations to improve our position have clearly shown? Before the Prime Minister says that she has done better that the Labour Government, will she remember that she supported every bit of the negotiation that the Labour Government undertook?

The Prime Minister: We are in balance with Europe taking manufactures and export of commodities into account. [HON. MEMBERS: "That is with oil."] Oil is a very important part of our trading capability and we are in balance. If something is a very important part of our trading capability, why not take the whole of it into account?
With regard to manufacturing industry, our trade with Europe has declined less rapidly than trade with the rest of the world. In other words, we have done rather better with Europe. I remind the hon. Member that our balance of payments last year was almost at an all-time record. He will not like that. He and his hon. Friends never like good news.
With regrd to jobs in Europe, perhaps the hon. Member has seen the CBI estimate that about 2½ million jobs depend on our membership of the Common Market.

Mr. Alan Clark: Was there much discussion concerning the French economy and the medium-term effect on unemployment of Socialist policies, which have brought about interest rates of over 20 per cent., a currency at an all-time low, and accelerating inflation?

The Prime Minister: For reasons which my hon. Friend will understand, we did not discuss in detail the French economy. Several of us had it very much in mind in some of the proposals that we were putting forward to reduce inflation and to keep down deficits.

Mr. Douglas Jay: Would there not be much less antagonism between the United Kingdom and France if we both followed our own internal policies and paid for them ourselves?

The Prime Minister: For the vast majority of our budget we do follow our own internal policies. For the rest, we are seeking some advantages from Europe which we have not yet obtained, particularly in services. If we had a full and free internal market in services, it would be greatly to our advantage.

Sir Brandon Rhys Williams: In view of the importance of the Thorn-Tindemans proposals to increase investment and improve the employment outlook, was my right hon. Friend able to discern any good reason why the Socialist Government from France were so obstructive?

The Prime Minister: No, Sir. We were both surprised and disappointed at the suddenness of the intervention.

Mr. Nigel Spearing: Is the Prime Minister aware that in answering questions today the Lord Privy Seal said that he hoped that there would be a five-year agreement concerning the budget arrangement? Will she agree that continual bargaining every five years is wholly unsatisfactory, as it means that in the intervening period the United Kingdom is a client State?
Do not the arguments in favour of withdrawal continue to grow, while those in favour of membership diminish each year?

The Prime Minister: No. Certainly the United Kingdom is not a client State. We wanted a five-year agreement, with a review at the end of five years. I am the first to say—I have said in that forum on many occasions— that we want a solution so long as the problem persists. The problem persists because of the way in which the common agricultural policy works, which we are trying to change, and because of the relationship between world food prices and Community food prices, which varies from year to year. That is why this year we have had some unexpected results in the budget. We shall try to get a five-year agreement, with a review at the end of it. What I do not want is a constant argument about this matter. We are also simultaneously trying to secure appropriate changes in the common agricultural policy, which is part of the mandate.

Mr. Michael Latham: Does my right hon. Friend know how the Opposition Front Bench have the gall even to talk about the Common Market deficits when their own record in Government on this matter was so absolutely abysmal? Is she aware that she will have the full support of Conservative Members in trying to sort this matter out, in view of the excellent progress made three years ago?

The Prime Minister: I am very grateful to my hon. Friend. May I make the matter absolutely clear? I cannot stress too often—we have stressed to our partners—that it is not only a question of getting a good result on the budget. We cannot go ahead with the proposals on the common agricultural policy or the others unless we get an agreement on the budget. The three must go ahead together. Unless we get reasonable results on the budget, a great deal of the Common Market forward proposals will be held up severely.

Mr. Donald Anderson: Why does not the Community, with its undoubted trade weight, go beyond merely urging Japan—the word "urging" was used twice in the communiqué—to open its domestic markets? Why is not the Community more even-handed in also criticising the United States of America for its interest rate and trade policies?

The Prime Minister: The Foreign Ministers agreed that the Community would take action with regard to Japan, and we are hoping to invoke article 23 of the GATT.
It ill behoves some of our partners to criticise the United States for having a high deficit. One cannot criticise someone else for having a high deficit if one is pursuing the same policy oneself. I am at liberty to criticise the United States for having a high deficit because we are running a low deficit.

Sir Anthony Meyer: As the United Kingdom is a permanent member of the Community, should not its budget contribution problem receive a permanent solution?
Will my right hon. Friend also accept that there will be very general support for the firmness with which she defended the idea that the Common Market should extend also to services?

The Prime Minister: I am grateful to my hon. Friend. The Common Market should extend to services, and it is a condemnation of some of our partners that they have not so far been able to agree to the directive with regard to services, particularly insurance and air fares. We have asked for and said that it would be very much better to have the kind of formula which tied the solution to the existence of the problem. We would then not have to look at it again, except, perhaps as a matter of form, to review it after a considerable number of years. We must still continue to try it for that, but I doubt whether we shall be wholly successful. Therefore, if we could get a settlement for five years, it would be an advance on what we have had hitherto.

Mr. David Stoddart: The right hon. Lady described the summit conference as a busy conference. Would it not be correct to describe it as a bitchy conference, bearing in mind the remarks by Mme. Cresson about the right hon. Lady being a terrorist and the discussion between Mme. Cresson and the Minister of State, Ministry of Agriculture, Fisheries and Food? They were slogging at each other on the BBC "World at One" programme? Has it not yet been brought home to the Prime Minister that European unity will be best achieved outside the Market instead of inside the Market, with the perpetual quarrelling about finances, agriculture and so on?

The Prime Minister: Mme. Cresson was not at the conference. There were only two women present at the


conference. One was myself and the other was Mme. Flesch. She did not speak, and anything that I said was fully justified, as it usually is.

Mr. Richard Body: In discussing the problems of unemployment in Western Europe, was any conclusion reached by my right hon. Friend's colleagues and herself as to why the unemployment rate in Norway, Sweden, Austria and Switzerland is only 1 or 2 per cent., while it is more than 10 times as much as that in the Common Market, although 12 years ago we were all enjoying full employment? Can it be that the common agricultural policy is having some cumulative effect in misallocating resources?

The Prime Minister: Switzerland has run very low inflation policies and very orthodox financial policies. On that basis, and with very co-operative industrial relations, Switzerland and Austria have both done extremely well. Norway, like a number of Middle Eastern countries, has massive deposits of oil and gas and a very small population, yet even Norway is finding considerable difficulty in some of its industries.

Dr. M. S. Miller: In EEC matters, as in other matters, the right hon. Lady has exhibited, if I may use the words of the Home Secretary, an extraordinary degree of patience. Will she tell the House how long it will be before she realises what are the legitimate and reasonable interests of Britain in this respect and recommends that unless they are satisfied she will withdraw from the whole charade?

The Prime Minister: I am extraordinarily patient—provided I get my own way in the end. I have not done too badly so far. On the budget, we are now receiving refunds in respect of last year. In the absence of a fresh agreement, the same formula will continue, so we shall receive refunds at the beginning of next year in respect of this year. We were hoping to overtake that agreement with a much longer one—preferably one that lasts as long as the problem lasts, which would be the only sensible way to do it. If patience gets the right answer, it is the right quality.

Mr. Albert McQuarrie: Following the Prime Minister's statement that the CAP was discussed, can she say whether there were any discussions during the conference on the finalisation of the common fisheries policy, in view of the serious problems faced by fishermen at present?

The Prime Minister: There were not discussions during the full conference, but on the margins of it I made strong references to the need to achieve a common fisheries policy and not only that, but one that was fully fair to our fishermen.

Mr. Dick Douglas: Will the Prime Minister reflect on the serious omission from her statement of a reference to the position of the OPEC countries? The fact that the Council of Ministers has met and, apparently, not discussed the issue is a sign of its insularity from international events. Will the Prime Minister concede that the Community should try—I know that it would be difficult—to have meetings with OPEC countries to see how their production can meet the demands of the Western industrialised countries so that we can avoid the cyclical events that we experienced in 1973 and 1979?

The Prime Minister: The hon. Gentleman is reviving the old idea of the Euro-Arab dialogue. It has never got

off the ground because the OPEC countries have not wanted it. It takes two to have a dialogue. With regard to what we discussed, the subject of oil prices came up a great deal in the context of future economic and social affairs. We were all conscious that we have had two world recessions because of a sharp increase in oil prices. While a reduction in oil prices may mean that some of the OPEC countries have less to spend on imports, which will affect high exporting countries, we all agreed that on balance, the reduction in oil prices augured well for the world economy and gave the prospect of increasing expansion which would not otherwise have been there.

Mr. John MacKay: Returning to the subject of interest rates, was there a discussion on the likely impact, perhaps later this year, on the diminishing interest rates in Europe of a further rise in American interest rates? Did the summit come to an agreement on how we could manage to isolate Britain and Europe from the adverse effects of an upward movement in interest rates on the other side of the Atlantic?

The Prime Minister: We had a number of discussions, which included American interest rates. At the moment some European interest rates are actually higher than American interest rates. One cannot attack someone else's policies if one is also pursuing them with the same disastrous results. We cannot insulate ourselves wholly from American interest rates. We can try to do our best to keep our own interest rates down by pursuing policies which reduce inflation. Countries which pursue low budgetary deficit policies have a lower interest rate than those which do not.

Mr. Ron Brown (Edinburgh, Leith): Despite today's royal presence, will the Prime Minister agree that the Afghanistan problem must be resolved? It has been raised already. Will the right hon. Lady not accept that Babrak Karmal's offer is worthy of consideration? As the right hon. Lady will know, he has offered to send Soviet troops out of the country provided that he is given certain guarantees. Will this question of negotiations not figure in the thinking of the EEC? Is the matter not important enough to invite the gentleman to London even if such a visit only exposes his offer as unworthy? Is the matter not important enough—

Mr. Speaker: Order. The hon. Member for Edinburgh, Leith (Mr. Brown) has asked that question three times now.

The Prime Minister: We are not likely to deal with a puppet Government which is held in power by an occupying force. The way to deal with Afghanistan is the way that the United Nations suggested—for the Soviet troops to withdraw. That is being frustrated only by the Soviet Union.

Mr. Ron Brown: You recognised Pinochet.

Mr. John G. Blackburn: Will my right hon. Friend accept the congratulations of the House on her statement regarding the Middle East, because it is the desire of the House to have peace in that area? Will she acknowledge that the State of Israel has honoured the Camp David agreement? It has sacrificed 50 per cent. of oil production, its natural gas and Yamit, a town in that area, as a token of peace. Will my right hon. Friend tell the House how she sees the position in Israel, particularly as the Foreign Secretary is there today?

The Prime Minister: We are all anxious to have a lasting peace in the Middle East which does justice to Israel's right to live in peace behind secure borders and does justice to the legitimate claims of the Palestinian people. We are concerned about the grave incidents that are taking place on the West Bank. I agree with my hon. Friend that when the withdrawal from Sinai is secured under the Camp David agreements, that will be a considerable step by Israel to yield some of those territories. I am aware that Israel has already given up some of the oil and gas wells. It is not possible to say precisely what will be the next step when the withdrawal has taken place. Doubtless my right hon. Friend the Foreign Secretary will be discussing that in Israel today. I am sure that his visit will be welcomed by the Israeli people and that he will come back with some constructive ideas.

Mr. Skinner: Will the Prime Minister tell the House what type of mechanism will be used by the Common Market countries to bring down interest rates, as the Community is based on the free movement of capital and labour? Is the right hon. Lady telling the House that, contrary to her views about lack of Government intervention in Britain and leaving matters to market forces, she acknowledges in respect of the Common Market that because of the high interest rates in America and prime rates elsewhere it will be necessary to intervene massively in order to bring down interest rates and to give the industrial economy a chance to breathe and reduce the ability of the casino economy that has proliferated across the Western hemisphere—

Mr. Speaker: Order.

Mr. Skinner: I am nearly done.

Mr. Speaker: Order. Another hon. Member wishes to catch my eye.

Mr. Skinner: rose—

Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) is merely preventing one of his hon. Friends from being called, because these questions will stop at 4.20 pm. The hon. Member has made a long statement rather than asked a question. Does the Prime Minister wish to reply?

Mr. Skinner: I know that I do not have a posh voice.

The Prime Minister: I shall answer in so far as I have grasped the meaning of the hon. Gentleman's question. First, there are large sums of money available to move

around the world and there is no way in which any country can avoid the effects of the market without having a totally East European economy. Even East European countries have not been able to avoid the market and have come to the market economy countries for food and for help. Those closed economies cannot even feed their own people. Clearly they have full employment, but they cannot feed their own people and they have a low standard of living. The hon. Member for Bolsover (Mr. Skinner) is an East European economist and politician.

Mr. Skinner: No I am not.

The Prime Minister: The way to get interest rates down is to run our economies in a way which reduces inflation and keeps down the amount of money which Government have to borrow. That will bring down interest rates.

Mr. Skinner: On a point of order, Mr. Speaker. I should like to inform the Prime Minister that, unlike—

Mr. Speaker: Order. Hon Members cannot use a point of order for passing information.

Mr. Skinner: Unlike her lot, I do not go to East European embassies.

Mr. Arthur Lewis: A week or 10 days before the Prime Minister left for the conference there were reports in the press that a committee of the European Assembly had been discussing alleged misappropriation of funds and improper payments to various people. Were those matters discussed at the conference? If not, will the Prime Minister ascertain the facts and inform the House, because the charges were widely reported in the press and a number of members of the European Assembly have made allegations? As British taxpayers' money is involved, we ought to know whether there has been any misappropriation of funds under the previous or the current President of the Commission.

The Prime Minister: That matter was not discussed by the Heads of Government. It would be a matter for both the Commission and the Financial Council. I shall inquire further and get in touch with the hon. Gentleman.

Mr. Skinner: On a point of order, Mr. Speaker. As the Prime Minister referred to me as an East European economist, let me disavow all claims—

Mr. Speaker: Order. I think that the hon. Gentleman has made his point. He has disavowed the charges. Hon. Members must not use points of order to continue a debate. If they do, we shall have disorderly proceedings.

Nuclear Materials (Transport)

Mr. Bob Cryer: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the dangers of transporting nuclear materials".
The subject is specific and important. Both nuclear waste and nuclear warheads are transported along the Aire Valley railway line through my constituency.
On 10 March a derailment took place near Leeds and I put questions about the accident to the appropriate Minister. An empty nuclear material flask was involved. The importance of the matter is emphasised by the fact that, although the flask was empty and the Central Electricity Generating Board and British Rail claimed that there was no danger, the area was cordoned off and, according to the current issue of New Statesman, police threatened photographers and reporters with arrest if they entered the area in which the train stood. There has been no formal inquiry or published report on that accident. 
I have been informed today that a further derailment has occurred at Healey Mills in West Yorkshire, again involving an empty nuclear fuel flask. That emphasises the urgency of the issue.
Many local authorities have declared nuclear-free zones, yet the transport of nuclear materials is continued, without any special precautions being discussed or called for from those authorities or any others.
The matter is urgent because the public have a right to know what has caused those potentially extremely serious accidents. They have the right to know urgently before a serious accident occurs, and they have the right to break through the cloak of secrecy that surrounds the subject. A debate would be an important means of ensuring that that was done.

Mr. Speaker: The hon. Member for Keighley (Mr. Cryer) gave me notice before 12 o'clock this morning that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
the dangers of transporting nuclear materials".
Everyone who heard the hon. Gentleman will realise that he has drawn our attention to a very serious matter, but he and the House know that my powers are limited. Under Standing Order No. 9, I am directed to take into account the several factors set out in the Order, but to give no reason for my decision.
I do not underestimate the importance of the matter that the hon. Gentleman brought to our notice, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

SCOTTISH AFFAIRS

Ordered,
That the matter of health care in Scotland, being a matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for their consideration.—[Mr. Garel-Jones]

European Court of Justice (Compliance with Judgments)

Mr. Tim Eggar: I beg to move,
That leave be given to bring in a Bill to provide for the temporary prohibition or restriction on imports of goods in transit from member states which remain in breach of judgments of the Court of Justice of the European Communities.
The Bill empowers the Secretary of State for Trade, after consultation with the Commission, to restrict the import of any class or classes of goods from an EEC member country that has remained in breach of a judgment of the European Court of Justice for more than three months. Once the Secretary of State is satisfied that the member State has remedied the matter complained of, the restriction on imports shall be ended.
It is worrying that member States should even contemplate defying a declaration from the European Court of Justice. It is also unsatisfactory that we have to contemplate introducing trade sanctions agains fellow member States that defy declarations of the European Court. Almost every hon. Member, whatever his view on EEC membership, agrees that member States should observe Community obligations and co-operate with the Community institutions while they are members.
For many years it has been commonplace for member States to ignore EEC directives that they believe are against their national interest. My right hon. Friend the Prime Minister drew attention this afternoon to the slow progress being made on the Commission's service industry directive.
A more worrying trend has emerged in recent years of member States ignoring judgments from the European Court of Justice. It is extraordinary that Governments who constantly urge their own citizens to obey the laws that they pass should themselves ignore the laws of a Community that they joined voluntarily. I can think of no political or sectional justification for such action. Governments should behave in the way that they expect their citizens to behave towards them.
Not only is the attitude of member States to the European Court undermining respect for the law and the concept and future of the Community, but it is having a serious economic effect on this country, because it particularly adversely affects the Scotch whisky industry. The French Government have refused to comply with a declaration given by the European Court of Justice in February 1980.
Since January 1978, when we attained full membership of the EEC, the discriminatory taxation levied by France on Scotch whisky has amounted to £135 million—about two and a half times the United Kingdom's net contribution to the EEC last year. President Mitterrand would do well to look to the canard in his own back yard before criticising our attitude towards budget payments. It is well known that France is not the only member State that has ignored the judgment of the European Court in the past.
I hope that the House will bear with me if I go very briefly through the history of the action taken by the Commission against France in relation to taxation on Scotch whisky. In the early 1970s the Commission started discussions with the French Government about the ways in which French Government taxes discriminated unfairly


against foreign spirits, particularly Scotch whisky. After that long period of discussion, formal proceedings were initiated by the Commission in March 1976. Despite this, the French, in both 1977 and 1978, increased the discrimination against Scotch whisky and eventually, in August 1978, proceedings were lodged with the Court of Justice.
It was not until February 1980 that France was condemned by the European Court of Justice. Yet, rather than accept the inevitability of the judgment of the court, the French Government have simply ignored it. We know for certain that the illegal tax will be levied at least until February 1983, and we have no certainty that it will be rescinded thereafter. It is intolerable that, some three years after the judgment and some seven years after the commission acted formally, the French Government have still not complied with both the wishes of the Commission and of the European Court.
It is not surprising that the Scotch whisky industry feels particularly hard done by, since some of our companies in this country that export Scotch whisky have been at the receiving end of orders from the European Court with which they have had no choice but to comply.
The reason for member States' lack of interest in the judgments of the court is, in part, that there is no sanction that can be carried out by the court, by the Commission or by any other member State. The judgment of the court cannot be enforced if a member State wishes to defy it. The Bill that I am introducing today is designed to give the United Kingdom a sanction against action by another member State in defiance of the European Court of Justice.
It has been put to me that it is curious to respond to a fiscal restriction on trade within the Community by the imposition of another restriction. I am told by some that it would be best to pursue political remedies. Yet the very fact that a case comes before the European Court is itself a recognition that political means have failed. When, two and a half years after a European Court judgment, the member State concerned still prefers to defy that judgment, that is a recognition not only that political persuasion has failed but that the law has failed.
We should therefore be prepared to introduce this Bill. I hope that it will never be used. I hope that the fact that the Secretary of State for Trade possesses such a sanction will persuade the offending member State that it should obey the ruling of the European Court of Justice. Nevertheless, I feel that this House and the Secretary of State should have the power that my Bill would give them.

Mr. George Cunningham: rose—

Mr. Deputy Speaker(Mr. Bernard Weatherill): Does the hon. Gentleman seek to oppose the Bill?

Mr. Cunningham: Yes, Sir, I do, but extremely briefly. I have no intention of calling a Division because, as we all know, the Bill the hon. Gentleman seeks leave to introduce has no chance whatever of reaching the statute book. I do, however, oppose the proposition because I would not like people to feel that the arguments that he adduced are sufficient. When I say that I shall not call a Division, that is a point on which I could change my mind before the end of my speech if I find my own arguments

sufficiently persuasive and if what I said at the beginning were to create a problem. Perhaps, on second thoughts, I would be prepared to call a Division at the end of my speech if I find my argument persuasive enough, unless I change my mind—[Interruption.]
More seriously, I hope that the apparently sound arguments that the hon. Gentleman has advanced in the cause of adherence to the law are not thought to lack any other aspect. I do not wish to suggest that I disagree with him on the subject of Scotch whisky, because, as he may know, if he knows anything about Scotch whisky, no representative of the borough of Islington would be likely to do that, since the borough of Islington is the only part of this country, south or north of the border, that has ever tried to get good statutory provisions with regard to Scotch whisky.
My opposition to the hon. Gentleman is based upon the consideration that if the Community progressively and swiftly seeks to advance to being what amounts to one country, with the law of that union enforceable throughout it in the rigid fashion that he suggests, the Community will break up and will deserve to do so. I suggest to the House that the attitude of the French is correct, not with regard to Scotch whisky but with regard to Community law. The French say that if Community law operates in a manner that is severely detrimental to the interests of France Community law must be bent or broken to protect French interests.
We should do the same with regard to British interests. That is not only a British national point that is being made there, but one that is in the long-term interests of the Community and those who want to see the Community continue indefinitely. A swift move to rigid union within the Community is something that will break it, not preserve it. I hope, therefore, that no one listening to the speech of the hon. Gentleman will feel that there was not a very strong argument for the other side of the case.
Having put that argument, I think it would not be helpful to the House if I were, after all, to press this matter to a Division.

Mr. Deputy Speaker: Although I do not know whether the hon. Gentleman has persuaded himself, he has certainly persuaded me that he intended to vote against the Bill. He cannot be compelled to vote or to put in Tellers.

Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.

Bill ordered to be brought in by Mr. Tim Eggar, Mr. Roger Sims, Dr. J. Dickson Mabon, Mr. John Spence, Mr. Ian Campbell, Mr. Michael Ancram, Mr. David Myles, Mr. Dick Douglas, Mr. Bowen Wells, and Mr. Richard Shepherd.

EUROPEAN COURT OF JUSTICE (COMPLIANCE WITH JUDGMENTS)

Mr. Tim Eggar accordingly presented a Bill to provide for the temporary prohibition or restriction on imports of goods in transit from member states which remain in breach of judgments of the Court of Justice of the European Communities: And the same was read the First time; and ordered to be read a Second time upon Friday 14 May and to be printed. [Bill 100.]

Oil and Gas (Enterprise) Bill (Allocation of Time)

Ordered,
That the Report [29 March] from the Business Committee be now considered.—[Mr. Pym.]

Report considered accordingly.

Question, That this House doth agree with the Committee in their resolution, put forthwith, pursuant to Standing Order No. 43 (Business Committee) and agreed to.

Following is the report of the Business Committee:
That—
(1) the order in which proceedings on Consideration are taken shall be New Clauses relating to Parts I and II, amendments to Clauses 1 to 17, remaining New Clauses, amendments to Clauses 18 to 36, New Schedules and amendments to Schedules 1 to 4;
(2) the allotted days which under the Order [8th March] are given to the Proceedings on Consideration and Third Reading shall be allotted in the manner shown in the Table set out below and, subject to the provisions of that Order, each part of the Proceedings shall, if not previously brought to a conclusion, be brought to a conclusion at the time specified in the third column of that Table.

Table


Allotted day and proceedings
Time for conclusion of proceedings


First day
New Clauses relating to Parts I and II and amendments to Clauses 1 to 11.
7 pm


Amendments to Clauses 12 to 17
10 pm


Remaining Proceedings on Consideration
Midnight


Second day



Third Reading
7 pm

Orders of the Day — Oil and Gas (Enterprise) Bill

[IST ALLOTTED DAY]

As amended (in the Standing Committee), considered.

New Clause 1

MEMORANDUM AND ARTICLES OF ASSOCIATION

'The Articles of Association of any subsidiary established under sections 1 and 9 shall be laid in draft before both Houses of Parliament and shall be subject to an affirmative resolution.'—[Mr. Merlyn Rees]

Brought up, and read the First time.

Mr. Merlyn Rees: I beg to move, That the clause be read a Second time.
We have just passed the business motion and very amicably it was done. I suspect that, had we known that we would have a statement lasting an hour and a Te n-Minute Bill, we might well have re-jigged our agreement. We tried to arrange discussion on one of the most important aspects of the Bill right at the beginning. We shall just have to see how we go.
At last we have the articles of association. We had them towards the end of the Committee stage, but by then it was, of course, too late to discuss them. It is, therefore, appropriate that we discuss them today because it is the first time we have been able to do so. It is equally appropriate that we will eventually discuss the final copy, which is the reason for the new clause.
We should, as of right, be given the chance to debate the articles of association of companies that are to be privatised. That debate should take place as they pass from being "shell" companies. If a company was being nationalised the House would expect the legislation m contain details of the rules by which the company was to be run. Equally, the articles of association of denationalised companies should be put into an order, discussed and voted on.
Nothing in the Bill tells us about the nature of the company or its relationship with the Government. I shall come back to that when we discuss Government directors. Such details are central to legislation which, in effect, sets up a company as this Bill does. The articles should be dealt with by Parliament.
We are talking only of draft articles. It would be appropriate that the final articles—I do not know to what degree they are to be changed—of Britoil and any other company privatised under the legislation should be dealt with in the way suggested in the new clause. That is the full purpose of the new clause.
The new clause allows us to discuss the articles. Upstairs we should have had to contrive a way to discuss them. At the beginning of the articles is the memorandum of association of Britoil. It says what the objects of the company are. The House is setting up the company. We are entitled to look at its objects.
Paragraph (C) on the first page of the memorandum states:
To carry on all or any of the businesses of developers, producers, refiners".


I go no further at this point. The new company, Britoil, must have the right, if it so wishes, to move into refining. It may not be clever to do that at the moment. In setting up the company on behalf of the Government, does the Secretary of State see it as being able, if it wishes, to move into refining?
As I read the continuation of the paragraph, it appears that Britoil can not only deal in coal but produce it. The Secretary of State had the articles drawn up. I am not raising the problem of the National Coal Board. It has a monopoly, with small companies at the edges. I presume that Britoil could go into coal production in other parts of the world. Will the Secretary of State confirm that?
On page 8, clause 3 (LL) states:
It is hereby declared that in this clause:
(i) 'petroleum' means any of the following (other than coal) namely:—
(a) mineral ore, natural gas and bituminous shales.
Why is natural gas included in that way? I could guess. In the Bill as a whole the ability to produce oil has been taken away from the British Gas Corporation. Here Britoil is being allowed to go into the production of natural gas.

The Secretary of State for Energy (Mr. Nigel Lawson): Obviously.

Mr. Rees: The issue arose in another discussion on the Bill. If a company goes for one, it may get the other. Is that the reason? I am only seeking knowledge and not making a profound point. It is difficult to make profound points on articles of association.
I turn to page 23 of the articles. It is important to get this clear. What on earth are the directors of these and other firms supposed to be doing? I raise a personal point. I have always been sceptical about what a Government director does in these companies. It would be useful to know what the Secretary of State has in mind. He is to appoint the Government directors.
Article 85(E) states:
The number of Directors referred to in paragraph (A) of this Article is:—
(i) two, at any time when the voting shares registered in the name of the Secretary of State represent more than 35 per cent. of the issued voting shares;
(ii) one, at any time when the voting shares registered in the name of the Secretary of State represent more than 20 per cent., but not more than 35 per cent., of the issued voting shares;
(iii) none, at any time when the voting shares registered in the name of the Secretary of State represent not more than 20 per cent. of the issued voting shares."
Article 10(E) on page 4 states:
The Special Share holder may require the Company to redeem the Special Share at its nominal amount at any time. Is it the Government's long-term intention completely to withdraw from a shareholding in the company? If so, will the Secretary of State come back to the House and tell us why? He has powers over the number of directors and to redeem the special share. We have been told that the special share is an important element in protecting the national interest.
I find article 71 (B) on page 19 intriguing. It states:
If there are, in the opinion of the Special Shareholder reasonable grounds for believing that any person or relevant persons has obtained or is attempting to obtain, directly or indirectly, control over the Board or its composition, the Special Shareholder, whether or not he has received any notice pursuant

to paragraph (A) of this Article 71, shall give written notice to the Board that he believes that there are such grounds, specifying them.
There is then set out action that the special shareholder can take. What are the reasonable grounds? Why has the Secretary of State put in the words "reasonable grounds"? I read constantly in the newspapers of early morning coups, secret board meetings—[AN HON. MEMBER: "Dawn raids."] Yes, dawn raids—that is a much gentler way of putting it.
If the grounds are reasonable, the Secretary of State will not know anything about it. It will all be over before he can do anything. What has the Secretary of State in mind? Will there be in the Department of Energy an office with a notice on the door "Reasonable grounds office"? Will there be a little chap going around the companies where there are special shareholders listening to find out whether anyone is to do anything so quickly that the special shares cannot be used?
On the same point of control, in regard to article 71(B)(i) I turn to the EEC and its rules, if that is the right word. On the basis of a 51 per cent. shareholding by the Government, as I understand it, the EEC assumes that we have control of the company. Can the Secretary of State be absolutely sure that if we are below that—as we will be initially and even more so afterwards, I anticipate—the European Court will not rule that we are no longer in control of the company, with all the consequences of that?
Even so, I am advised that Stock Exchange rules say that when a certain percentage of share ownership has been reached the owner of those shares has the right to buy the rest of the shares. I am seeking knowledge. Has that been taken into account in the drawing up of the articles of association? We want an assurance from the Secretary of State that legal problems will not arise.

Dr. J. Dickson Mabon: I should like to get one point clear when the Secretary of State replies. The right hon. Member for Leeds, South (Mr. Rees) has raised a good point. As I understand it, there is no way in the present arrangements whereby we can have a special share. I know of no company—Government owned or privately owned—that has a special share system. Certainly I know of no company which has a special share system whereby the shareholders do not actually own any equity in the company. There is an attempt to make European company law. I am advised that there is no way in which this system can be integrated into that. Is it not possible that the Secretary of State is embarked on a perilous voyage of company law that will not stand up either in the British system or in the European system of company law?

Mr. Rees: I am grateful to the right hon. Gentleman for reinforcing the question I asked. No doubt we shall get an answer at the end of the day.
In regard to directors, there are many basic arguments about what the Government are doing in the Bill. However, over the years under the National Enterprise Board, the industrial relations commission and the Industry Act 1972, there has been a mix of ownership of companies. In some instances I would not want it, but in other instances it is appropriate.
As long ago as 1964 the Labour Party manifesto said that a Labour Government would
Go beyond research and development and establish new industries, either by public enterprise or in partnership with private industry.


In Opposition we are talking about the investment of funds in companies which are publicly owned and partially publicly owned. I am talking not about nationalised industries with appointed directors in a non-Company Act atmosphere, but about companies with a Government shareholding of 100 per cent., 51 per cent. or even 49 per cent., in which the Government appoint directors. In what way will the Secretary of State seek to influence the Government directors?
Article 85(A) says that the Secretary of State has the right to appoint directors. I am interested to know why it is put that way rather than that he will appoint directors. The greatest number he can appoint is two out of seven or two out of 20 if the Government have more than 35 per cent. of the shares.
The degree of control in Britoil will be no greater than in BP, but I accept that that is a separate position. BP happens to have two Government directors and I have always been sceptical about their role.
For the moment let us stick to the role of directors in mixed economy firms that will arise out of privatization—or the other way round, for the reasons that I quoted in our 1964 manifesto. What is the role of these directors to be? Is there an analogy with The Times where there are independent directors? They are all publicly appointed with a clear role to look after the national interest, but, as someone said, however, "You could have fooled me".
I ask about the role of directors in this company because once we start going more broadly into the role of directors in this growing range of companies there might be ifs and buts. I can ask the Secretary of State directly about this because he has put it in the articles of association. I am dealing with Britoil, although the new clause is wider. At least, this will enable the Secretary of State to concentrate on why he told the drafters of the articles of association that he wanted Government directors.
Will the task of these directors be exactly the same as that of the other directors who will be elected by the shareholders? Will the directors whom the Secretary of State appoints represent the Government's view? The Secretary of State may say, after consultation with his advisers, "We need somebody on that board who is good on receivership. The company does not look healthy so let us have someone who understands that sort of thing". Or he might decide to appoint someone with great financial acumen or someone who knows a lot about research in oil supply.
A Government appointed director is of that sort. He carries on in the same way as any other director but a Government director is surely there to look after the Government's interests. What sort of person does the Secretary of State have in mind? I would be interested to go further, but I suppose it is too difficult.
Another question that has arisen in the last year or two is whether the Government directors will have fiduciary responsibility in that their job will be to look after the interests of the firm on the basis of the articles of association, and they will be there for that purpose alone.

Dr. Mabon: They cannot be directors otherwise.

5 pm

Mr. Rees: That may be so, but a Government might wish to do something directly against the narrow, but important, interests of shareholders. Why was the

provision for Government directors included in the articles, and what is the intended meaning of the Secretary of State's responsibility? That is important, as there will be more Government directors. It is a growing occupation. Whatever Governments have done, the number of such directors has increased in the past 10 years. The mix of the economy will continue and people will be appointed to boards, whether it be with 51 per cent., 30 per cent. or 75 per cent. of the shares. We should be clear about that. Some believe cynically that such positions are sinecures for people who behave themselves. I reject that entirely. I am sure that the Secretary of State has in mind a purpose for Government directors.

Dr. Mabon: rose—

Mr. Rees: The right hon. Gentleman is always extremely helpful. Of course I shall give way.

Dr. Mabon: If the Secretary of State has fewer than half the company's shares, the directors whom he appoints will be obliged by company law to act in the interests of all the shareholders. As the majority of shareholders are not represented by the Secretary of State, directors appointed by him will therefore be bound to act differently from the Secretary of State if they feel that the other shareholders are suffering as a consequence of the decisions that he is urging on his appointed directors. I do not believe that Government appointed directors will necessarily do what the Government want them to do.

Mr. Rees: If that is the case, why are the Government bothering? Nevertheless, the Secretary of State has the special share. We should clear the matter up. In doing so, we shall do a good turn to those who work in other firms with Government directors.
I turn now to the national interest and foreign shareholders. Is the special share intended to protect the national interest? Is it intended, for example, that nonresidents should not have shares? There are other ways of achieving the same result.
When British Aerospace was privatised, the Government included a provision which, however incompetently it was drawn up, served that purpose. Would that not be a better way than depending on a special share which might disappear? The day must surely come when the special share disappears, so if the national interest is involved in this way it will suffer. I accept, of course, that the articles are not drawn up in the same way as those for British Aerospace.
Those are the major points arising out of the articles of association. They are important and this is the first time that we have discussed them. The House should have a further opportunity to examine the articles when they are no longer in draft. The Opposition propose that
`The Articles of Association of any subsidiary established under sections 1 and 9 shall be laid in draft before both Houses of Parliament and shall be subject to an affirmative resolution '
This is particularly important, as the articles may change fundamentally over the years. If such a change took place, the new clause would provide for the articles to be embodied in a Bill if the Government continued to proceed in the present way. The Opposition believe that this is the right way to proceed. The new clause should be adopted in the interests of parliamentary accountability.

Mr. Dick Douglas: The articles of association are novel. I have a few brief points to put to the Secretary of State.
First, have the articles been submitted to the council of the Stock Exchange? Has it expressed a view on the matter? I put that point in Committee to the Secretary of State, whose interest in financial matters was exhibited in a previous incarnation as the writer of the Lex column in the Financial Times. Would memorandum and articles of association of this type suffer the scrutiny of the council of the Stock Exchange and others interested in protecting shareholders?
I well understand that the articles are drafts, that we are discussing a shell £100 company, and that there will be considerable embellishment before the articles become part of a prospectus. Nevertheless, it is shabby for a Government who purport to believe in enhancing private enterprise and releasing ensnared shareholders to embattle shareholders almost totally by means of a golden share. It is like being in President Lincoln's Cabinet when, apocryphally, he sat back and said:
The Ayes are 10 and Noes are one, but the Noes are the President, so the Noes have it.
The articles will enable special shareholders to outvote the majority of shareholders on practically everything if they think fit. That is not in the interests of all shareholders. It does not wash with the established conventions or, indeed, with the legal position of companies now. I accept that other objectives have been put upon company directors. They must now look after the interests not only of shareholders, but, and rightly, the interests of employees, but the traditional view remains that directors should look after the interests of all shareholders and protect them.
By the articles, the special shareholder, if he or the Secretary of State sees fit—we do not know what he will be pressed to do or how he will be persuaded to use that special share—may look after the national interest as opposed to what may be thought to be the interests of all shareholders.
Article 10(E) states:
The Special Shareholder may require the Company to redeem the Special Share at its nominal amount at any time.
How can that square with article 10(A), which states:
The Special Share may be transferred only to the Secretary of State or to a Minister of the Crown or to the Treasury Solicitor.
That seems to suggest that the special share may be redeemed by the company. What is the consideration for the special share? There is no sign in the articles of association of what consideration may be offered to the special shareholder for that privilege.
That either has a meaning or it does not. Either special shares can only be transferred to the Secretary of State and his nominees, or they can be redeemed. If they can be redeemed, what is the consideration for the redemption? An extraordinary privilege is being given away. I am not a lawyer and these are legalistic points, but either that has a meaning in the articles of association, or it does not.
This is an attempt by the Secretary of State to square the circle. He is hiving off an important Government-owned enterprise. I shall not go into the case of Amersham International Ltd. and its present valuation. There may be opportunities to do that later in the debate. We are examining the logic and the benefit to the nation of this measure. The Secretary of State, in his strong-willed way, is entitled to get his policy, but we are entitled to say that it is wrong-headed.

Mr. T. H. H. Skeet: The hon. Gentleman must recognise the difference between an equity investment, which is entitled to profitability, and what would be a purely voting share, which has control but no profitability attached to it.

Mr. Douglas: That is an absurd suggestion from the Conservative Benches. We are talking about having all the power without much of the responsibility in terms of equity. The council of the Stock Exchange and the CBI have been irate about class A shares and have deprecated them. Yet, as a result of this shareholding, in many instances the Government will outvote those who hold the equity and take the risk.

Mr. Skeet: rose—

Mr. Douglas: No, I shall not give way again at this stage. The Government will outvote those who take the risk. That is an appalling suggestion.
I give warning on this. The Secretary of State has made a very interesting suggestion. If, as I hope, the next Government is a Labour Government, the Secretary of State's example will be examined further. It is a wonder that my right hon. Friend the Member for Bristol, South-East (Mr. Benn) is not already delving into it. We might consider the possibility of taking a golden share in the 100 largest companies in the country and outvoting everyone. What is the use of planning agreements and all the paraphernalia of committees if we can simply follow the Secretary of State's example and take a golden share? It is no wonder that my right hon. Friend called him the East European Minister. He is now outclassing East European Ministers.
This is an absurd suggestion in terms of the operation of the traditional joint stock company in this country. I know that there are variations, but the Secretary of State must give precedents. He cannot do so because he is creating his own precedent, in which those taking the risk in terms of equity capital can be outvoted. I know that the articles of association are in draft and can be altered, but the Government must answer these questions. If the council of the Stock Exchange has examined the articles of association, we should have its views on them. If it has not, the Secretary of State should throw them in the wastepaper basket.

Mr. Gordon Wilson: The demand was frequently made in the Standing Committee that the articles of association should be produced, in view of the problems which arose over how to safeguard the national interest following the disposal of the equity oil assets of BNOC and the formation of the acquiring company, Britoil.
Having examined the articles of association, particularly those on page 19, I do not think that there is much more than a fig-leaf of protection. As the Monopolies and Mergers Commission showed in relation to the Royal Bank takeover, doubt must always be expressed about any assurances given about control and so on once the equity in a company has been disposed of. The Government intend to dispose of the equity but to try to retain some minimal control over Britoil through the special shareholder.
I believe that the Government's efforts may be impotent in terms of paragraph 71(B). The Minister referred to the provision there that


If there are, in the opinion of the Special Shareholder, reasonable grounds for believing that any person or relevant persons has obtained or is attempting to obtain, directly or indirectly, control over the Board or its composition,
the special shareholder would then have certain powers.
5.15 pm
Leaving aside for the moment the difficulties that the special shareholder may sometimes have in determining whether there is an indirect attempt to take over control of the company, there is still a problem in the wording dreamt up by the Department's lawyers. They must be "reasonable" grounds. If this had been worded in such a way as to give the Secretary of State, or his other persona, the special shareholder, absolute discretion to intervene at any time, there would be less difficulty. Having used the term "reasonable", however, the Secretary of State and the special shareholder, if challenged, will be under an obligation to defend the discretion being used as "reasonable"
.
If the procedure set in motion by article 71(B) were attacked, the attacker would presumably be able to go to the courts. What would be the "reasonable grounds" on which the Secretary of State or the special shareholder could intervene? To judge from the speeches and arguments in Committee and on Second Reading, it is patently clear that the objective of the reasonable grounds would be to maintain the national interest in relation to the oil assets being disposed of.
If anyone can take the Secretary of State or the special shareholder to court, it follows that the objective of the national interest may not be found by the courts to be "reasonable". The United Kingdom courts, including the Court of Session, if the jurisdiction of the Scottish courts were invoked, might find it reasonable, but if there were a subsequent reference, or indeed an initial reference, to the European Court and it appeared that the special shareholder had been trying to block an attempt by European companies or interests to take control of the company, I am sure that the European Court would regard the action of the special shareholder as unreasonable.
In those circumstances, the protection that the Government seek to build in by the extraordinary means of having a special shareholder would become utterly nugatory. I am not sure what legal advice the Minister has had on this, but it seems to me that, once having disposed of the equity, he will in effect have lost control of the company, especially if European interests within the EEC were seeking to establish control over it.
I shall not go into detailed criticism of the wording of article 71(B)(i), in which the attempt to secure control is couched in extraordinary gobbledegook. Those who play cards might express it more simply as giving the special shareholder the power to "trump" any opponents taking a view different from his own.
My second question to the Minister is practical rather than legal. What kind of experience would the Government directors have? Does the Minister intend that they should be business men or people with knowledge of the oil industry, or does he intend that they should be civil servants, whether retired or active? I recall that civil servants were the equivalent of directors in BNOC. Or do the Government intend to select from their placement list of the great and the good those who, for a small fee, would be willing to take up the onerous duty of safeguarding the public interest? As we are disposing of equity oil assets,

it would be of interest to know what expertise the Government seek to place on the board of directors to safeguard the Government's interests in those assets.

Mr. Lawson: Three main points have been made in this brief debate. The right hon. Member for Leeds, South (Mr. Rees) expressed concern about the understanding of the memorandum, the Government directors, and the powers that reside in the special shares. The right hon. Gentleman's understanding of the memorandum is correct in every respect. He asked about the definition of petroleum. There had to be a definition, and we have simply taken the definition that appears in the Petroleum and Submarine Pipe-Lines Act 1975. That seemed sensible and as far as I am aware has caused no problems.
The hon. Member of Dundee, East (Mr. Wilson) asked about Government directors. There is no intention that these should be civil servants, unlike the Government directors on BNOC. The analogy was made, and it is a familiar one, with the Government directors on BP. It seemed appropriate that as the Government have a large shareholding it should be represented by directors on the board. However, these directors will have exactly the same duties and obligations under company law as any other directors of the company. The right hon. Member for Leeds, South may ask what point there is in having them. While the Government retain a substantial shareholding in Britoil, there is a value in having on the board directors who can keep the Government fully informed—there are, of course, other channels of information—and perform, in general, the job that the directors of BP perform.
The right hon. Gentleman correctly said that I have the right to appoint the directors. However, I am not obliged to do so. If he is developing the strong argument that I should not exercise that right, it is one that I am prepared to consider. However, I am not yet persuaded. I believe that we should exercise the right to appoint Government directors.

Mr. J. Grimond: Can the right hon. Gentleman tell the House whether the Government directors on BP have made any great contribution to the company? How often have they been called upon to defend public interest?

Mr. Lawson: They perform their duties in the same way as other directors of BP. That is their job. They are a link between the Government, who have a significant shareholding of 39 per cent.—the Government will initially have a 49 per cent. shareholding in Britoil—and the company. There is a good precedent, and it is sensible to have such directors. It is not the heart and core of the matter—the special shareholding is a great deal more important and I shall come to that shortly—but on balance it is a sensible power to have in the articles. I am not sure of the right hon. Gentleman's position, but, if he believes that it is wrong to have Government directors, he should say so. I am prepared to consider not exercising that right, but at the moment I have not been so persuaded.
A number of questions were asked about the special share. Attention was drawn to the power under the articles for the Government's special share to be redeemed. The hon. Member for Dunfermline (Mr. Douglas) asked at what price the share would be redeemed. The articles clearly show that the share will be redeemed at par—at the nominal price. If the shares are £1 each, they will be redeemed at £1 However, we have no intention of having


the share redeemed. The power is included because it is customary for articles of association to cover a range of contingencies. Those who are acquainted with articles of association will be aware of that. I give an undertaking to the House that not only do the Government have no intention of having the share redeemed, but that they have every intention of retaining it. If circumstances arise—I cannot envisage any—in which the Government feel that it is right that the share should be redeemed, we shall come to the House first. I give that undertaking freely, because it is the Government's intention to retain the special share.

Dr. J. Dickson Mabon: Is it not true that under the Bill in its present form the Secretary of State, whoever he may be—probably not the right hon. Gentleman—can dispose of the share without parliamentary consent? The undertaking is, therefore, nonsense. It does not mean a damned thing.

Mr. Lawson: That is an unwise and improper suggestion. I hope that the right hon. Gentleman, who was a former Minister, will withdraw it. When a Minister gives an undertaking at the Dispatch Box, it means something. To say that it means nothing is wrong. Ministers make such statements on many occasions.
It is true that redemption will not require parliamentary consent. I do not suggest otherwise. However, if the Government of the day at any time feel that circumstances have changed and that the share should be redeemed, the House will be informed before redemption takes place. More importantly, we have no intention of having the share redeemed. The whole point of the share is that it is held, and retained.

Mr. Merlyn Rees: I accept the Minister's word. There may be other arguments to deploy, but I want to be clear that he is giving the undertaking on behalf of the Government.

Mr. Lawson: I give that undertaking on behalf of the Government.
The hon. Member for Dunfermline asked whether the articles had been approved by the Stock Exchange council. The answer is "Yes, they have". I should not put before the House articles of association, and an important proposition, which had not been cleared by the Stock Exchange council. This is not the first time that the hon. Gentleman has suggested that this is a terrible proposal. He will recall that, although the power is slightly different, in Amersham International Ltd. there is a special share which has special powers. I was not aware that that put off investors. [Interruption.]

Mr. Douglas: rose—

Mr. Lawson: I shall now reply to the main point of the right hon. Member for Leeds, South on how the system is meant to work, the share and the rights attached to it, and why articles 70 and 71 have been included.
We have three key considerations and objectives in mind. We wanted to create effective safeguards which would enable the Government to prevent any unacceptable change in the future control of the company, whatever the nationality of the parties involved. That deals also with the issue raised by the hon. Member for Dundee, East. It is

important to protect the character of Britoil as an independent company, responsible for its own management and business strategy.
The second point that lies behind the Government's thinking in devising this form is that it is essential, in the Government's opinion, that the special rights should not provide an opportunity for backdoor interference in the affairs of the company. I think that I made it clear on Second Reading—I certainly did so in Committee—that the Government do not intend to use their rights as a shareholder to intervene in Britoil's commercial decisions, except in the specific safeguard circumstances.
The Government do not expect to vote with their shareholding—that is the whole of their shareholding, leaving aside the special share—in opposition to resolutions supported by a majority of the board, although they will retain the right to do so. We have tried to construct safeguards that will operate as reserve powers. They will come into force only in the event of an attempt to take over voting control of the company, control of the board or of its compositions, or to alter the safeguards or any other key articles of the company.
5.30 pm
The powers are passive. They will need to be triggered by outside events beyond the Government's control before they can be brought into play. In practice, it is highly unlikely that they will ever need to be brought into play. The very existence of these powers will act as the most formidable deterrent to anyone who tries to take over control of the board, of the company or of the majority of its shares, and who the Government consider to be unacceptable.
It is possible that at some future date the Government will seek to reduce their shareholding below 49 per cent. It is important to make it clear that the powers will remain however much the ordinary shareholding is reduced. That is why the safeguards are attached entirely to the single special share with a nominal value of £1 fully paid, which is held by the Government and which is separate from the rest of the shareholding.

Mr. Douglas: Is that right?

Mr. Lawson: The hon. Gentleman is not fully acquainted with Stock Exchange terminology.
The safeguards will remain fully active even if the Government have no other shareholding. It is right that there should be safeguards. There is concern on both sides of the House about the ownership of Britoil and its future ownership. The provisions that we are discussing meet that anxiety. They meet the will of the House on Britoil's crucial independence. We have given, as has BNOC and its advisers, considerable thought to the articles to ensure that they are an effective means of protecting Britoil's independence against unacceptable changes in control. Therefore, I commend the articles to the House.

Dr. J. Dickson Mabon: rose—

Mr. Lawson: No, I shall not give way. Time is limited and the right hon. Gentleman has intervened more than once.
It is the Government's opinion that it would not be appropriate to provide for the articles of Britoil, or any other subsidiary established under the Bill, to be subject to the affirmative resolution procedure or to any other parliamentary procedure. The Government take that view


for two main reasons. The central purpose is to make Britoil like any other independent private sector oil company. It would be contrary to that purpose to make its articles of association subject to some form of parliamentary procedure when those of other oil companies are not.
Secondly, the procedure that the Opposition wish to introduce would be ineffective. If the new clause were to be accepted, Parliament could approve articles of association, but those articles could be changed. The feature that will prevent them from being changed as matters stand is the special share. That is what is important, and that is why it is part of the articles of association. There is no point in the procedure which the new clause seeks to introduce. It is both unnecessary and impracticable. I hope that the House will approve the arrangements that we have made to secure Britoil from unacceptable changes in control and that it will reject the clause.

Dr. J. Dickson Mabon: I wish to protest at the way in which the Secretary of State has dealt with the debate. It is novel to have a special share system. If I understand the Secretary of State aright, Amersham International is the only other organisation that has such a system. Of course, that is an extremely bad example. The right hon. Gentleman's invention may prove in the course of time to be both novel and lasting. I suppose that we might apply it to BP and other institutions in which the taxpayer has a formidable if not an overweening interest. I agree that the right hon. Gentleman may have invented something that proves to be considerable. However, I object to his unwillingness solidly to argue on the articles of association.
In Committee we were not allowed to discuss the articles of association. It would have been desirable to do so. We were not allowed, rightly, as a matter of procedure, to discuss them. We have been able to discuss them only in the short period since half past four. The right hon. Gentleman is uncomfortably aware that his articles are so delicate that they should not be subject to any buffeting. There are rumours of hybridity and of many other difficulties in the public market place. I am not responsible for them. I do not know who Lex is today—I do not know who is the right hon. Gentleman's successor—but he, whoever he is, is probably speculating on the rumours. The right hon. Gentleman should try to bring all the rumours to an end and try to ensure that Britoil is launched comfortably and properly on its course. Unfortunately, he has not done that. It is the form of the guillotine that prevents him from so doing.

Mr. Lawson: The right hon. Gentleman was not in Committee when the guillotine was introduced.

Dr. Mabon: I certainly was. I was in Committee for the entirety of its discussions on part I, which was a complete bore. As the right hon. Member for Leeds, South (Mr. Rees) knows, we had to extract tooth by tooth the various issues arising from the articles of association that we now see in their full form.
The House has been allowed only one hour to debate what we are told by the right hon. Gentleman will be the greatest act of privatisation in British history. We are supposed to debate the articles of association in one hour. The new clause is designed to allow the House to debate them prior to the company going to the public exchange,

to the money markets. I do not understand why the Secretary of State refuses to accede to the terms of the new clause, which do not seek to damage his Bill. There will be no doctrinaire infringement of his concept. We are not challenging him on the fundamental issues. He might be right, but we are arguing that he might conceivably be wrong.
That is what the House is all about. Ministers can be wrong and that is all we are saying. This conceited Secretary of State is so sure of himself that he did not allow the Committee, which was appointed by the House, to examine the articles. He refuses to give the House time to do so. He has presented them to us too late. He allows us only one hour to discuss them—he will have the backing of the Whips—and he expects us to accept them.
The right hon. Gentleman is making a fundamental error in parliamentary procedure and is misjudging the good sense of the British people. What he has done is wrong and he knows that it is wrong.

Mr. Merlyn Rees: It is said that there is only one other example of a company in which there is a special share. I merely say to the Secretary of State that I have known other conceited Secretaries of State and Ministers of State. Unfortunately, they are not unusual. We have not had time to discuss the issues properly. It would have been very much better if we had been able to discuss them in Committee. We did not have time today to do so. We have heard some interesting points today, but I did not think that the Secretary of State was answering new clause 1. It refers to
The Articles of Association of any subsidiary established under sections 1 and 9.
Therefore, it is not just this but all the other matters that could arise in the Bill. The articles of association should be laid before the House. That is all that we are asking for—nothing more or less. The Bill is short in parliamentary accountability all the way through. I strongly recommend to my right hon. and hon. Friends that we vote for the clause.

Question put: That the clause be now read a Second time:

The House divided: Ayes 219, Noes 278.

Division No. 113]
[5.40 pm


AYES


Abse, Leo
Campbell, Ian


Allaun, Frank
Canavan, Dennis


Alton, David
Cant, R. B.


Anderson, Donald
Carmichael, Neil


Archer, Rt Hon Peter
Cartwright, John


Ashley, Rt Hon Jack
Clark, Dr David (S Shields)


Ashton, Joe
Cocks, Rt Hon M. (B'stol S)


Atkinson, N.(H'gey,)
Coleman, Donald


Bagier, Gordon A.T.
Concannon, Rt Hon J. D.


Barnett, Rt Hon Joel (H'wd)
Cook, Robin F.


Beith, A.J.
Cowans, Harry


Benn, Rt Hon Tony
Cox, T. (W'dsw'th, Toot'g)


Bennett, Andrew(St'kP'tN)
Craigen, J. M. (G'gow, M'hill)


Bidwell, Sydney
Crowther, Stan


Booth, Rt Hon Albert
Cryer, Bob


Boothroyd, Miss Betty
Cunliffe, Lawrence


Bottomley, Rt Hon A.(M'b'ro)
Cunningham, G.(Islington S)


Bradley, Tom
Cunningham, Dr J. (W'h'n)


Bray, Dr Jeremy
Dalyell, Tam


Brown, Hugh D. (Provan)
Davidson, Arthur


Brown, R. C. (N'castle W)
Davies, Rt Hon Denzil(L'lli)


Brown, Ronald W. (H'ckn'y S)
Davies, Ifor (Gower)


Brown, Ron(E'burgh, Leith)
Davis, Clinton (Hackney C)


Buchan, Norman
Davis, Terry (B 'ham, Stechf'd)


Callaghan, Rt Hon J.
Deakins, Eric


Callaghan, Jim (Midd't'n &amp; P);
Dean, Joseph (Leeds West)






Dixon, Donald
Magee, Bryan


Dobson, Frank
Marks, Kenneth


Dormand, jack
Marshall, D(G'gowS'ton)


Douglas, Dick
Marshall, Dr Edmund (Goole)


Douglas-Mann, Bruce
Marshall, Jim (Leicester S)


Dubs, Alfred
Martin, M(G'gowS'burn)


Duffy, A. E. P.
Mason, Rt Hon Roy


Dunn, James A.
Maxton, John


Dunwoody, Hon Mrs G.
Maynard, Miss Joan


Eadie, Alex
Meacher, Michael


Eastham, Ken
Mellish, Rt Hon Robert


Edwards, R. (W'hampt'n S E)
Millan, Rt Hon Bruce


Ellis, R. (NE D'bysh're)
Miller, Dr M.S.(E Kilbride)


Ellis, Tom (Wrexham)
Mitchell, Austin (Grimsby)


English, Michael
Mitchell, R.C. (Soton Itchen)


Evans, Ioan (Aberdare)
Morris, Rt Hon A. (W'shawe)


Evans, John (Newton)
Morris, Rt Hon C. (O'shaw)


Field, Frank
Morris, Rt Hon J. (Aberavon)


Fitt, Gerard
Moyle, Rt Hon Roland


Fletcher, Ted (Darlington)
Newens, Stanley


Ford, Ben
O'Halloran, Michael


Forrester, John
O'Neill, Martin


Foster, Derek
Owen, Rt Hon Dr David


Foulkes, George
Park, George


Fraser, J. (Lamb'th, N'w'd)
Parker, John


Freud, Clement
Parry, Robert


Garrett, John (Norwich S)
Pendry, Tom


George, Bruce
Penhaligon, David


Golding, John
Powell, Raymond(Ogmore)


Graham, Ted
Prescott, John


Grant, George(Morpeth)
Race, Reg


Grant, John (Islington C)
Rees, Rt Hon M (Leeds S)


Grimond, Rt Hon J.
Richardson, Jo


Hamilton, W. W. (C'tral Fife)
Roberts, Albert(Normanton)


Harrison, Rt Hon Walter
Roberts, Gwilym(Cannock)


Hart, Rt Hon Dame Judith
Robertson, George


Hattersley, Rt Hon Roy
Robinson, G. (Coventry NW)


Haynes, Frank
Robinson, P. (Belfast E)


Healey, Rt Hon Denis
Rooker, J. W.


Heffer, Eric S.
Roper, john


Hogg, N. (E Dunb't'nshire)
Rowlands, Ted


Holland, S. (L'b'th, Vauxh'll)
Sandelson, Neville


HomeRobertson, John
Sever, John


Homewood, William
Sheerman, Barry


Hooley, Frank
Sheldon, Rt Hon R.


Horam, John
Shore, Rt Hon Peter


Howell, Rt Hon D.
Short, Mrs Renée


Howells, Geraint
Silkin, Rt Hon J. (Deptford)


Hoyle, Douglas
Silkin, Rt Hon S. C. (Dulwich)


Huckfield, Les
Silverman, Julius


Hughes, Mark(Durham)
Skinner, Dennis


Hughes, Robert (Aberdeen N)
Smith, Rt Hon J. (N Lanark)


Janner, Hon Greville
Soley, Clive


Johnson, Walter (Derby S)
Spearing, Nigel


Jones, Rt Hon Alec (Rh'dda)
Spriggs, Leslie


Jones, Barry (East Flint)
Stallard, A.W.


Kaufman, Rt Hon Gerald
Steel, Rt Hon David


Kerr, Russell
Stewart, Rt Hon D. (W Isles)


Kilfedder, James A.
Stoddart, David


Kilroy-Silk, Robert
Stott, Roger


Lambie, David
Strang, Gavin


Lamborn, Harry
Straw, Jack


Lamond, James
Summerskill, Hon Dr Shirley


Leadbitter, Ted
Taylor, Mrs Ann (Bolton W)


Leighton, Ronald
Thomas, DrR. (Carmarthen)


Lewis, Arthur (N'ham NW)
Thorne, Stan (Preston South)


Lewis, Ron (Carlisle)
Tinn, James


Lofthouse, Geoffrey
Torney, Tom


Lyon, Alexander(York)
Varley, Rt Hon Eric G.


Lyons, Edward (Bradf'dW)
Wainwright, E. (Dearne V)


Mabon, Rt Hon Dr J. Dickson
Wainwright, R.(Colne V)


McCartney, Hugh
Walker, Rt Hon H.(D'caster)


McDonald, DrOonagh
Wellbeloved, James


McElhone, Frank
Welsh, Michael


McKay, Allen (Penistone)
White, Frank R.


McKelvey, William
White, j..(G'gow Pollok)


MacKenzie, Rt Hon Gregor
Whitehead, Phillip


McNally, Thomas
Whitlock, William


McNamara, Kevin
Wigley, Dafydd


McTaggart, Robert
Willey, Rt Hon Frederick





Williams, Rt Hon A.(S'sea W)
Wright, Sheila


Wilson, Gordon (Dundee E)



Wilson, William (C'try SE)
Tellers for the Ayes:


Winnick, David
Mr. James Hamilton and


Woodall, Alec
Mr. George Morton.


Woolmer, Kenneth



NOES


Adley, Robert
Eyre, Reginald


Aitken, Jonathan
Fairbairn, Nicholas


Alexander, Richard
Fairgrieve, Sir Russell


Alison, Rt Hon Michael
Faith, Mrs Sheila


Amery, Rt Hon Julian
Farr, John


Ancram, Michael
Fell, Sir Anthony


Arnold, Tom
Finsberg, Geoffrey


Aspinwall, Jack
Fisher, Sir Nigel


Atkins, Rt Hon H. (S'thorne)
Fletcher, A. (Ed'nb'gh N)


Atkins, Robert (Preston N);
Fookes, Miss Janet


Baker, Nicholas (N Dorset)
Forman, Nigel


Banks, Robert
Fowler, Rt Hon Norman


Beaumont-Dark, Anthony
Fox, Marcus


Bendall, Vivian
Fraser, Rt Hon Sir Hugh


Benyon, W. (Buckingham)
Fraser, Peter (South Angus)


Best, Keith
Fry, Peter


Biffen, Rt Hon John
Gardiner, George(Reigate)


Biggs-Davison, SirJohn
Gardner, Edward (S Fylde)


Blackburn, john
Garel-Jones, Tristan


Blaker, Peter
Gilmour, Rt Hon Sir Ian


Body, Richard
Glyn, Dr Alan


Bonsor, Sir Nicholas
Goodhew, Sir Victor


Boscawen, Hon Robert
Goodlad, Alastair


Bottomley, Peter (W'wich W)
Gorst, John


Bowden, Andrew
Gow, Ian


Boyson, Dr Rhodes
Grant, Anthony (Harrow C)


Braine, Sir Benard
Gray, Hamish


Bright, Graham
Griffiths, E.(B'ySt.Edm'ds)


Brittan, Rt. Hon. Leon
Griffiths, Peter Portsm'thN)


Brooke, Hon Peter
Grist, Ian


Brotherton, Michael
Grylls, Michael


Brown, Michael(Brigg &amp; Sc'n)
Gummer, John Selwyn


Browne, john(Winchester)
Hamilton, Hon A.


Bruce-Gardyne, John
Hamilton, Michael(Salisbury)


Bryan, Sir Paul
Hampson, Dr Keith


Buck, Antony
Hannam, John


Budgen, Nick
Haselhurst, Alan


Bulmer, Esmond
Havers, Rt Hon Sir Michael


Burden, Sir Frederick
Hawkins, Paul


Butcher, John
Hawksley, Warren


Butler, Hon Adam
Hayhoe, Barney


Cadbury, Jocelyn
Heddle, john


Carlisle, John (Luton West)
Henderson, Barry


Carlisle, Kenneth(Lincoln)
Heseltine, Rt Hon Michael


Carlisle, Rt Hon M. (R'c'n)
Hicks, Robert


Chalker, Mrs. Lynda
Higgins, Rt Hon Terence L.


Channon, Rt. Hon. Paul
Hill, James


Chapman, Sydney
Hogg, HonDouglas(Gr'th'm)


Churchill, W.S.
Holland, Philip(Carlton)


Clark, Hon A. (Plym'th, S'n)
Hooson, Tom


Clark, Sir W. (Croydon S)
Hordern, Peter


Clarke, Kenneth(Rushcliffe)
Howe, Rt Hon Sir Geoffrey


Cockeram, Eric
Howell, Rt Hon D.(G'ldf'd)


Colvin, Michael
Howell, Ralph (N Norfolk)


Cope, john
Hunt, David (Wirral)


Corrie, John
Hunt, John(Ravensbourne)


Costain, Sir Albert
Hurd, Rt Hon Douglas


Cranborne, Viscount
Irving, Charles(Cheltenham)


Critchley, Julian
Jessel, Toby


Dean, Paul (North Somerset)
JohnsonSmith, Geoffrey


Dickens, Geoffrey
Jopling, Rt Hon Michael


Dorrell, Stephen
Joseph, Rt Hon Sir Keith


Douglas-Hamilton, Lord J.
Kaberry, Sir Donald


Dover, Denshore
Kershaw, Sir Anthony


du Cann, Rt Hon Edward
Kitson, Sir Timothy


Dunn, Robert(Dartford)
Lamont, Norman


Dykes, Hugh
Lang, Ian


Eden, Rt Hon Sir John
Latham, Michael


Edwards, Rt Hon N. (P'broke)
Lawrence, Ivan


Eggar, Tim
Lawson, Rt Hon Nigel


Elliott, Sir William
Lee, John


Emery, Sir Peter
LeMarchant, Spencer






Lennox-Boyd, HonMark
Rossi, Hugh


Lester, Jim (Beeston)
Rost, Peter


Lewis, Kenneth(Rutland)
Royle, Sir Anthony


Lloyd, Ian (Havant &amp; W'loo)
Sainsbury, Hon Timothy


Lloyd, Peter (Fareham)
St. John-Stevas, Rt Hon N.


Loveridge, John
Shaw, Giles (Pudsey)


Luce, Richard
Shaw, Michael (Scarborough,


Macfarlane, Neil
Shelton, William(Streatham)


MacGregor, John
Shepherd, Colin(Hereford)


MacKay, John (Argyll)
Shepherd, Richard


Macmillan, Rt Hon M.
Silvester, Fred


McNair-Wilson, M. (N'bury)
Sims, Roger


McNair-Wilson, P. (New F'st)
Skeet, T. H. H.


McQuarrie, Albert
Speed, Keith


Marland, Paul
Speller, Tony


Marshall, Michael (Arundel)
Spence, John


Marten, Rt Hon Neil
Spicer, Jim (West Dorset)


Mates, Michael
Spicer, Michael (S Worcs)


Maude, Rt Hon Sir Angus
Sproat, Iain


Mawhinney, Dr Brian
Squire, Robin


Maxwell-Hyslop, Robin
Stainton, Keith


Mayhew, Patrick
Stanbrook, Ivor


Mellor, David
Stanley, John


Meyer, Sir Anthony
Steen, Anthony


Miller, Hal (B'grove)
Stevens, Martin


Mills, Iain (Meriden)
Stewart, A. (E Renfrewshire)


Mills, Peter (WestDevon)
Stewart, Ian (Hitchin)


Miscampbell, Norman
Stokes, John


Moate, Roger
Stradling Thomas, J.


Monro, Sir Hector
Tapsell, Peter


Montgomery, Fergus
Taylor, Teddy (S'end E)


Moore, John
Tebbit, Rt Hon Norman


Morris, M. (N'hampton S)
Temple-Morris, Peter


Morrison, Hon C. (Devizes)
Thatcher, Rt Hon Mrs M.


Mudd, David
Thomas, Rt Hon Peter


Murphy, Christopher
Thompson, Donald


Myles, David
Thornton, Malcolm


Neale, Gerrard
Townend, John(Bridlington)


Neubert, Michael
Townsend, Cyril D,(B'heath)


Newton, Tony
Trippier, David


Normanton, Tom
Trotter, Neville


Nott, Rt Hon John
van Straubenzee, Sir W.


Onslow, Cranley
Vaughan, Dr Gerard


Oppenheim, Rt Hon Mrs S.
Viggers, Peter


Osborn, John
Waddington, David


Page, John (Harrow, West)
Wakeham, john


Page, Richard (SW Herts)
Waldegrave, Hon William


Parris, Matthew
Walker, B. (Perth)


Patten, Christopher(Bath)
Walker-Smith, Rt Hon Sir D.


Patten, John (Oxford)
Wall, Sir Patrick


Pattie, Geoffrey
Waller, Gary


Pawsey, James
Walters, Dennis


Percival, Sir Ian
Ward, John


Peyton, Rt Hon John
Warren, Kenneth


Pollock, Alexander
Wells, Bowen


Porter, Barry
Wheeler, John


Prentice, Rt Hon Reg
Whitelaw, Rt Hon William


Proctor, K. Harvey
Whitney, Raymond


Pym, Rt Hon Francis
Wickenden, Keith


Raison, Rt Hon Timothy
Wiggin, Jerry


Rathbone, Tim
Wilkinson, John


Rees-Davies, W. R.
Winterton, Nicholas


Renton, Tim
Wolfson, Mark


Rhodes James, Robert
Young, Sir George(Acton)


RhysWilliams, Sir Brandon
Younger, Rt Hon George


Ridley, Hon Nicholas



Rippon, Rt Hon Geoffrey
Tellers for the Noes:


Roberts, M. (Cardiff NW)
Mr. Anthony Berry and


Roberts, Wyn (Conway)
Mr. Carol Mather.

Question accordingly negatived.

New clause 2

METHOD OF SALE OR VALUATION OF SHARES IN SUBSIDIARY

`Before the disposal of any shares in any subsidiaries established under sections 1 and 9 draft orders establishing the

method of the sale of the shares, and their valuation of any such shares shall be laid before Parliament and shall be subiect to an affirmative resolution.'.—[Mr. Rowlands.]

Brought up, and read the First time.

Mr. Edward Rowlands: I beg to move, That the clause be read a Second time.
This new clause has become much more important as a result of the fiasco of the sale of shares in Amersham International during our deliberations on the Bill. That fiasco followed other privatisation blunders involving Cable and Wireless and British Aerospace. The succession of blunders should be a severe warning to the Government as they approach yet another attempt to privatise and sell, on a much larger scale, the shares of Britoil. It should not only be a warning but should provide some lessons to the Government. We believe that Parliament should have the right to debate those lessons and, in moving the Second Reading of the new clause, I wish to draw those lessons to the attention of the Government and obtain from them a series of assurances about the method of valuation of Britoil and any British Gas Corporation assets that might be sold.
The first lesson to be learnt from the three blunders, especially Amersham, is the Government's incompetence in handling privatisation and especially the incompetence of the Government's advisers. There has been a regular monotony about the sort of advisers to whom the Government have turned for advice on privatisation. We shall argue that the Government should remove all the advisers who were involved in the Amersham sale from any advisory capacity in the case of Britoil. There is no room for N. M. Rothschild and Sons Ltd. in Britoil and it is sad to know that, to date, it will be the adviser to the British National Oil Corporation.

Mr. Douglas: Is not my hon. Friend being unduly harsh on the advisers? The company was given one form of advice and the Government were given another. That the Government took the wrong advice is directly their responsibility.

Mr. Rowlands: My hon. Friend draws attention to an important point. He will find, when I come to my second point, that I believe that there is a wider lesson to be learnt from Amersham.
The first lesson is that incompetence, whether of the Government or their advisers, has cost Britain money and benefited individual speculators. However, a much wider lesson must be learnt before there is any attempt to privatise Britoil. What emerged from Amersham was that there is a series of contradictory objectives built into the Government's privatisation programme. Those contradictory objectives led to the blunders.
Presumably, the first basic objective of privatisation is to maximise the proceeds derived from any sale. The idea is to get as much money as possible, to reduce the public sector borrowing requirement and to have the opportunity to give some tax relief in the run-up to an election. However, the Government then set down a series of other objectives which in many ways conflicted with the first objective. I do not necessarily quarrel with those objectives, but the combination tends to lead to a contradiction and to the sort of blunders that we saw in Amersham.
The second objective is the romantic view about popular shareholding capitalism. It goes back to the


nineteenth century idea that there are many individuals in the country buying and selling shares all the time. That is not true, but the Government believe that it is true and that privatisation should be a promotion of the concept. So they try to disperse the shares as widely as possible, but in doing so they cannot maximise the proceeds from the sale. If the shares are split up and cannot be offered in large blocks, for which people would pay a premium price, the shares have rather less value.
The third objective concerns the desirable or undesirable control over the company. It also leads one to put restrictions on the sale of the shares which may allow the maximisation of the proceeds of any sale. Amersham typified that mixture of contradictions. The Secretary of State properly described the objectives during our debate on Amersham, but they can be conflicting. In Amersham, rather than an argument about sale by tender or sale by firm offer, the quickest and the best way to achieve maximisation of the proceeds would have been to sell the company lock, stock and barrel to an American company. We would have received much more than we did from the flotation of the shares. There are ways to maximise privatisation proceeds, but they conflict with the other privatisation objectives of the Government.
The moment that one tries to introduce other objectives into the concept of privatisation one moves away from the simplistic view of free market evaluation. The argument about the method of sale, when one should sell and the valuation to be put on the assets moves out of the strict simplistic arena of the free market to a series of other objectives that have nothing to do with what price one can get for the assets. It is right and proper, and is the purpose of our new clause, that those issues behind the valuation should be debated in the House before any final decisions are made. That is one of the basic lessons arising from the conflicting objectives of the Government towards privatisation, and it has led to the sort of blunders and fiasco that we have seen in the case of Amersham.
Our worry and concern is that if there was misjudgment and blunder over Amersham, an £80 million company, what will happen when we try to sell more than£1 billion-worth of oil assets in the form of Britoil? In addition, there will be further X hundreds millions of pounds worth of assets in respect of British Gas in the North Sea, to which we must add the sale of British Gas assets in Wytch Farm. All of those things will supposedly happen in the coming financial year.

6 pm

Mr. David Myles: I cannot quite understand the point that the hon. Gentleman is making. Does he believe that it is totally wrong as an objective to spread shares as widely as possible? I am aware of the argument that one man's gain is another man's loss, but surely it is better to spread the gain among the small investor rather than among the big companies.

Mr. Rowlands: I shall explain our position clearly and simply. We do not believe that assets should be moved out of public and national hands for private gain. Whether the small investor makes an extra special private gain or whether it is an institution does not alter the wrongness and immorality of selling national assets at a price far below their true value.
A cost must be paid for trying to disperse the shares. One does not obtain the true value of such shares if they are sold off lock, stock and barrel to one company or organisation. That cost should at least be acknowledged. Although the idea of dispersing the shares might sound warm-hearted and gentle, just as in the case of Amersham, the day after it is done the benefit disappears. Nearly half of Amersham's shares—25 million—changed hands the following day. As a result, one does not know whether a wide dispersal has been achieved. All that we do know is that a wide dispersal was achieved in the initial flotation. However, a day later those shares could be in the hands of institutions
.
One has therefore paid a price for trying to disperse those shares to the so-called benefit of the wider interest or the wider concepts of popular share-owning capitalism. That reveals what is inherently difficult and wrong in the act of privatisation. If that happened with Amersham, what will prevent it from happening in the case of Britoil, a £1 billion-plus privatisation proposal?
These are not merely the dilemmas of a Socialist Opposition. They were well presented and described in what everyone agrees to be a relatively reputable study and guide to Britain's North Sea oil and gas by Mr. Martin Lovegrove. On the privatisation of BNOC, this independent source refers to exactly the same sort of dilemmas. On page 59 of the study he said:
Whilst it is hard to justify any particular estimate, given in the evidence in the concluding paragraphs of the previous section it could be said the subsidiaries"—
by that he means BNOC subsidiaries—
are worth anything between £2 and £2·5 billion. If Government were to strip the assets of the Corporation and sell say 50 per cent. at auction, at which both British and overseas companies could bid, the cash raised would probably reflect this estimate—e.g., £1 to £1·2 billion.
He continues:
If BNOC shares are sold into the Stock Market, as Government currently intends, the money raised would probably be only of the order of £0·6 to £0·8 billion (although the state of the national economy and the world oil market, and the perceptions as to the chances of the Government's survival at the next Election, will naturally play a key role)…This is not regarded as being unreasonable…but it is still £0·4 billion less than the true realisable value.
All we are saying is that if one of the consequences of proceeding by a method of privatisation leads to a discount of nearly £½ billion, this House ought to have the right to discuss it and to decide whether that is the way we wish to proceed. That is the purpose of the new clause.
When talking about the various factors that could influence or affect the various amounts that might be obtained, and the valuation that could be placed on Britoil and British Gas oil assets, Mr. Lovegrove referred to the world oil market. We give a clear and unequivocal warning that unless something dramatic or significant happens to the existing oil market, there is no case for selling Britoil shares this year. The Government would be acting in dereliction of their duty if they did so.
No one who at present holds oil shares would sell them. The "grocer of Grantham" would not sell her oil shares. Her stockbroker would certainly not advise her to do so at present unless she was stuck for cash or wanted to raise money to buy Amersham shares. I do not know whether the Secretary of State or the Minister of State hold oil shares—I do not know whether they are allowed to do so—but I doubt whether their stockbrokers would advise them to sell the nation's oil shares at the present time.
I have taken advice from a number of stockbrokers in the last few days, and everyone has recommended that, unless one is stuck for cash, one should not sell.

Mr. Peter Rost: Will not the hon. Gentleman nevertheless admit that the Government are not proposing to sell Britoil shares at this moment? The situation may be quite different even in a matter of weeks, let alone months.

Mr. Rowlands: That is true. I accept that the situation can change. Oil prices could fall further. If Sheik Yamani's blackmail works, perhaps that will stabilise oil prices. However, oil prices have fallen by 60 per cent. in the last 18 months.
I take as an example two typical British independent oil producers who are comparable with the proposed Britoil company—Tricentrol and Lasmo. The value of Tricentrol in the last 18 months, based on the stock market's current estimate, has fallen by about £150 million. The value of Lasmo has fallen by £415 million.
I am saying that if the Prime Minister and the Secretary of State—a grocer in Grantham and a business man in Blaby—held oil shares, they would not sell them in the current climate. We demand that the Government do not sell the nation's oil assets and oil shares in the current climate. We are opposed to the sale in principle, but even on the Government's own criteria, unless there is a dramatic and significant improvement in the oil share market, we do not believe that there is a case for such a sale taking place this year. If the Government did that, they would be selling short the nation's vital oil assets. They would sell them at a knockdown price and at the worst moment. An individual would not sell his oil shares now unless he was stuck for cash, and nor should the nation.
That is the basis of our new clause. I shall put some other basic warnings and conditions to the Government on their approach to this new act of privatisation. First, no adviser associated with Amersham should be involved in any shape or form with the sale of Britoil. They should not be the Government's advisers or advisers of BNOC. Therefore, Rothschild must go.

Mr. Robert Rhodes James: Rothschild must go.

Mr. Rowlands: I agree that Rothschild must go and certainly not get involved. They made enough mess in Amersham and should not be given the chance to make a bigger blunder or mess. I also wish to ask the Minister—this is the first opportunity I have had to do this and I gave him notice of this question through his officials—about the peculiar and interesting comment in the Government's paper on the sale of special assets. Paragraph 55 of "The Government's Expenditure Plans 1982–83 to 1984–85", concerning the sale proceeds from privatisation generally, states:
Sale proceeds in 1982–83 are expected to total some £600 million. This assumes that proceeds from the disposal in 1982 of 51 per cent. of BNOC's upstream business, provided for in the Oil and Gas (Enterprise) Bill, will be received in two instalments: the first in 1982–83 and the second in 1983–84. It should be emphasised that the division of receipts between the two years is only an assumption and no decision has yet been taken on whether the flotation of Britoil will be on a partly-paid or fully-paid basis.
The concept of a partly paid basis at Amersham would have been unbelievable. On that basis, one could have

paid half, cleaned up and, six months later, paid the rest. That would be an attractive proposition to anyone. Perhaps one must do that sort of thing to try to sell £1 billion of assets. First value them low enough to make sure that one can give them away and secondly ask the prospective buyers for a half and half payment. Do the Government put forward that as a serious proposition? Do we take paragraph 55 to be a kite-flying exercise or something deliberate and meaningful?

Mr. Rost: rose—

Mr. Rowlands: I will not give way to the hon. Gentleman because we are under the guillotine and he has already had an opportunity to speak.
When replying, I hope that the Minister will tell us a little about paragraph 55.
Thirdly, there surely must be no question of further underwriting fees for the new Britoil sale. The real scandal of Amersham was that £890,000 was paid to underwriters to launch a share which was 20 times over-subscribed. The first day led to a 40p premium and 25 million shares changed hands within 24 hours. An underwriting company picked up £890,000 for doing that. There should be no question of underwriting fees for the privatised sale of any Britoil shares.

Viscount Cranborne: I am sure that the hon. Gentleman understands the function of underwriters better than I do. Judging from his remarks, I beg leave to doubt him. Surely the function of an underwriter is to underwrite the risk before the launch. The hon. Gentleman said that the risk of Britoil not being sold was considerable. Therefore, perhaps the underwriters are performing a function in this case.

Mr. Rowlands: The price is pitched and organised by the underwriters. On Amersham, they managed to collect £890,000 by organising a price 40p below what turned out to be the value, and then collected that £890,000 in fees. I understand why one needs underwriting fees in a private transaction. However, if the Government had been left with a percentage of the shares for Amersham, they would not have faced a terrible problem. They could hold those shares and decide what to do with them subsequently. There is certainly no case for producing large fees for underwriting the Britoil share. The Government can hold and bide their time if the shares are not sold. There is no problem in that respect.
The basic reason for raising all these points is to demonstrate that there are serious arguments. On the issue of privatisation, there are serious arguments when one moves away from a strict free market concept of valuation When one introduces other factors and objectives which affect and alter concepts of privatisation—as they did in previous privatisation measures and share launches—cost issues are involved. The House should have a right to debate such issues.
Therefore, the whole purpose of our new clause is to establish the principle that, before any decision is taken on valuation and method of sale, the Government must return to the House and debate the issue. From leaks, we understand that the Amersham debates took place when there were battles between the Treasury and the Department of Energy—Lawson v. Ridley. However, not one of those issues was brought to the floor of the House.
That occurred because there was no provision, when dealing with Amersham, to allow the issue to be brought to the House. Irrespective of the Opposition's stand on the divide about privatisation of public and private enterprise, the House ought to have a right, before the so-called "sale of the century" takes place, to discuss, approve or reject both the method and valuation of that company.

Mr. Rost: The Opposition have raised some important issues in proposing new clause 2. Although I cannot support the clause as a solution to those issues, I sympathise with some of the arguments advanced by the hon. Member for Merthyr Tydfil (Mr. Rowlands). Indeed, I have been critical of the Government's method of selling shares from the State sector back into the private sector, because in my view they ought to pursue that policy more strenuously. They would succeed in doing that if the method of sale were shown to be politically more acceptable.
To justify my arguments I shall refer not only to Amersham but to previous offers for sale. Cable and Wireless was certainly such an example. In that case, the method whereby the offers for sale was organised did less than justice to the Conservative objective of wider share ownership and risked discrediting the whole process of denationalisation. I am anxious that we get that right in future.
Offers for sale of concerns such as British Aerospace, Cable and Wireless and Amersham can certainly be judged as highly successful under the traditional criteria of Stock Exchange offers for sale. They were certainly successful as flotations. Nevertheless, they are subject to criticism, because they would have been justified as successful private offers for sale. However, they are not necessarily justifiable when dealing with public assets.
I am particularly critical that we have not given enough political guidance in these offers for sale to ensure that there is a genuine fair allocation to the small investor, and that we have not done enough to eliminate multiple applications—onal stags. Professional stags and multiple applications have a genuine role to play in normal offers for sale. However, when one is dealing with the sale of public assets at a discount—do not challenge—t is vital that the allocation of shares is seen to be as fair as possible, with a real emphasis on the small investor getting a fair share, rather than the multiple applicants.
The Cable and Wireless issue was more than five times oversubscribed. It allowed for a ballot for small applicants for 100 shares. Only one in three of those small applicants obtained shares. I know of small savers, including my mother-in-law, who has savings of only a few hundred pounds and is a pensioner. I advised her to make an application for 100 shares. She was unsuccessful in the ballot. However, I know of other friends and associates who made large applications and who did not have to enter the ballot. If one applied for 1,000 shares, one was automatically allocated 300 shares.
That system is justifiable and is an accepted method of launching a new issue when private assets are going into the hands of other private assets, but I maintain that that is not the right method when we are dealing with public assets going into private hands. There should be more political guidance to ensure that multiple applications are

eliminated That can be done and it is feasible It costs only a little more in time and effort to do that. In most cases, multiple applications can be weeded out.
If the issue is oversubscribed, as I hope it will be, the allocation should be not just weighted in favour of the small applicant, but heavily biased in favour of him, so that there is not a ballot unless the number of small applicants does not cover the amount of shares on offer. If there is a ballot, the small applicants will have an equal chance with the large applicant. If such a method were adopted, we would promote the objectives of wider share ownership and popular capitalism in a way that would be politically more acceptable than the traditional methods of offer for sale that we have launched so far.
I do not accept the Opposition's argument, but they are right to refer to the premium that has been attracted to the offer for sale of Amersham International Ltd., for example. I accept that if an offer for sale is to be successful it ought to be pitched at a price that will attract savers and investors. There is nothing wrong with that. However, I maintain that it is extremely difficult, because market sentiment changes so quickly, to value a new issue beforehand. It is easy to be clever afterwards. Therefore, I believe that there is an alternative solution, which can be adopted and which has been adopted in other cases.
A tender offer is an alternative, but not one that will meet the objectives of wider share ownership. Offers for tender are primarily of interest to the larger institutional pension funds and put off the small investor, as they are so complicated. However, there could be a two-tier arrangement in an offer for sale so that some of the shares were allocated to the institutions that tendered for them in competitive bidding. That would establish a price that would be a market price rather than a price that was fixed in advance and might be wrong. The advantage of the tender offer is that it fixes a market price, because institutional investors are competing against one another as they would in an auction.
If about one-quarter of the shares to be sold were offered by tender to appeal to the institutions, that would establish a market price and the institutions would obtain a share of the offer. If one followed that with a second offer for sale, which was deliberately arranged to appeal to the small saver, with all the multiple applications eliminated, if the allocation of shares gave strong preference to small investors and if the price of that second offer for sale were fixed at about 10 per cent. less than the tender price—a small discount to attract the small investor—the State would receive a fair price and realisation for the sale. The institutions would get a share of the sale, but at an attractive market price from the State's point of view. The small saver would get a genuine chance to obtain the shares, rather than a large proportion of the shares going to the multiple speculative applicants.

Mr. Tam Dalyell: The hon. Gentleman is making an extremely interesting contribution. Does he agree that the figure of £21·3 million for the underwriting fees in relation to Amersham International, British Telecom, Cable and Wireless and British Aerospace is excessive and is relevant to his argument? Does he dispute the figure of £21·3 million?

Mr. Rost: I am not discussing the underwriting figures. I was just about to suggest that if one adopted a system such as the two-tier sale that I am proposing there would


be no need for underwriting fees, because the institutions that would obtain their shares by tender would be offered the underwriting for the second offer for sale, which would be set at 10 per cent. less for the small investor. The institutions would be given the opportunity to top up their initial allocations if the small investor did not subscribe to the second offer for sale. That underwriting would cost nothing at all.
Any pension fund that had acquired some of the shares by tender and wanted to top up its holding would jump at the opportunity of buying more shares at 10 per cent. less than the price of the original purchase. Therefore, the underwriting would be taken care of without fees on the second offer for sale to the small investor. I do not wish to go into further details, because I would be straying out of order if I were to do so.
The Government must give firm political guidance for future offers for sale. It is no use blaming the merchant bankers, the brokers or the institutions that handle the issues. They were only doing their job, using their normal methods for handling offers for sale. If any blame should be attached to anyone, it should be to us in the House and to the Government for not giving guidance and saying that the offer for sale should be organised so that the small saver would get a better chance and a fairer price than so far.

Mr. Arthur Lewis: I was hoping that the hon. Gentleman would give a further explanation when he said that it would be easy to stop professional stagging. I should like to know how he would do that. The Stock Exchange has tried all ways.

Mr. Rost: I was just coming to that point. It is feasible to stop all but the most persistent multiple applicants. All that one has to do in advance is to announce that all cheques will be cashed. Many multiple applicants rely on the fact that the cheques are not presented. Such an announcement would eliminate the multiple applicants. They would not bother to apply because they have to put up the money. Secondly, it should be announced that it would be at least a week before the cheques were returned. If the Bank of England collected a little interest on the way, the taxpayer would not cry about that and nor would the Treasury. Therefore, if one announced in advance that all cheques would be cashed, that would discourage quite a few multiple applicants.
The applications should be computerised. The shares have to be allocated subsequently in any case. It is not beyond the bounds of modern techniques for the applications to be computerised, which would bring to light many multiple applications, unless they were disguised. Today when there are new issues many applicants do not bother to disguise the fact that they are making multiple applications. At least if my method were used, such applications would be more difficult, because under a computerised system they would come to light.
6.30 pm
There are other ways in which the multiple applications can be discouraged. For example, one can say in advance that if any multiple applications are discovered they will all be eliminated as a penalty. I think that that would be a further disincentive. The genuine applicant for the shares will certainly not complain if cheques are cashed. A genuine applicant expects his cheque to be cashed. Nor would a genuine applicant for 100 shares complain if it

took a week or so before the allocation of the shares was announced. That again would not damage the genuine investor, but it would discourage the more speculative stag.
There are other ways in which the Government could help to promote the objectives of wider share ownership and make the whole process of privatisation politically more acceptable. One such method is to advertise and to make the offers for sale more widely obtainable, perhaps through post offices. Advertisements for the prospectuses should be placed in popular newspapers, not just in the "heavy" newspapers.
There should be more emphasis on providing shares to employees. The Bank of England could become involved in seeing that there is fair play in the allocation of the shares and act as the principal sponsoring bank.
I am entirely in support of the Government's strategy to offer shares for sale. If we did it in a way that was less open to public criticism and was seen to be fairer to the small applicant, it would be possible to speed up the whole process. We could get other denationalisation measures launched in rapid succession. We could achieve the objectives of popular capitalism far more effectively if we were prepared to give a little more political guidance on the manner in which the offer for sale should be handled. If that is done, it will be to the advantage not only of the Government's strategy, but to the whole economy and its progress in years to come.

The Minister of State, Department of Energy (Mr. Hamish Gray): I intervene at this stage in order that I may do the hon. Member for Merthyr Tydfil (Mr. Rowlands) the courtesy of dealing with one or two of the points that he raised. I appreciate that we are working under a guillotine. Therefore, I shall try to keep my remarks as brief as possible so that others may be able to participate as we move on.
The hon. Gentleman started by giving us a fairly detailed account of his views on the Amersham International transaction. However, as most of us had already heard those views in Committee, he will perhaps forgive me if I do not follow him too closely along that line.
My hon. Friend the Under-Secretary of State went into great detail on 16 March on this matter. He explained to the House the thinking behind the whole way in which it was handled. He pointed out—it is only fair to the House that I should reiterate it—that whatever criticism may have been made, the shares allocated to small investors amounted to 22·6 per cent. of the issue, although their applications represented only 12 per cent. of the total. As a result of the special arrangements made for them, employees were allotted 33·6 per cent. of the issue and over 99 per cent. of the employees now have an interest in their company. The offers of free shares were fully taken up by the employees who, in addition, received all the shares for which they made preferential applications. Therefore, the Government's objective of giving employees a direct interest in their company was achieved.
The Amersham sale realised about £63 million for the taxpayer—an excellent return on the £6·3 million investment made by the Government. The Government's objective of a fair return for the taxpayer was achieved In short, as my right hon. Friend the Secretary of State said on an earlier occasion during our discussions on this


question and also in the House on another occasion, the Amersham transaction was a success. From the taxpayers' point of view it was unquestionably.

Mr. Rowlands: The Minister referred to the employees as holding 33 per cent. of the shares. If he will check that figure I think he will find that it is more like 3·7 per cent. of the shares.

Mr. Gray: I apologise. The hon. Gentleman is correct. It is 3·6, not 33·6—a substantial difference. I willingly concede the point.
The hon. Gentleman then asked about the public expenditure White Paper. He very kindly gave me notice of the question, and I can give him a clear answer to it. The division of the receipts from the Britoil sale in the White Paper is simply an assumption only for the purpose of presentation in the White Paper and does not imply that any decisions have been taken on the timing of receipts. Clearly the possibility of a partly paid issue in which some of the receipts might be delayed until 1983–84 will need to be considered. I repeat that, as the White Paper makes absolutely clear, no decisions have yet been taken.
The question of the arrangements for the offer, including the timing of receipts, can only be resolved by the Government and their advisers nearer the time of sales and in the light of conditions at that time.
The hon. Gentleman quoted from Mr. Martin Lovegrove's book but, like most people who quote in debate, he quoted the part which best suited his argument. If the hon. Gentleman had read on a little further he might have been rather more enlightened, for Mr. Lovegrove goes on to refer to the advantages of privatisation for the corporation and concludes:
In fact, it can be argued that with a sale of shares management"—
that is, management of the British National Oil Corporation—
should be able to expand the corporation's operations considerably, to the extent that Government, as a minority shareholder, would benefit through increasing dividends and, of course, taxes.
So I think Mr. Lovegrove has given a very fair view in his book, but it is also fair that the House should have the other side of the story as well.
The shares in Britoil will be available for purchase by the public. The Government intend that they should be widely spread, and we are giving a lot of thought to ways of ensuring that small investors have a proper opportunity to buy Britoil shares. In that regard, my hon. Friend the Member for Derbyshire, South-East (Mr. Rost)—who has made such a useful contribution to our deliberations in Committee, particularly on anything to do with shares—has given us the benefit of his experience. We shall consider very seriously the points made by my hon. Friend and by other hon. Members. We are equally anxious that the small investor should be properly catered for.
Hon. Members will understand that at this stage the most I can say is that we would like there to be a fair measure of flexibility when the shares are allocated for the scaling down of large applications to give preference to small investors and to avoid undue concentration of ownership. We are taking safeguards in the articles against any unacceptable change of control of the company, a subject that we discussed earlier this afternoon.
There are several other aspects of the sale on which decisions have not yet been concluded and which cannot be finally settled until nearer the time of the sale, in the light of market conditions and in consultation with our advisers. But the Government's objective will be to obtain a fair price for the taxpayer, and my right hon. Friend has already assured the House that the Government would not go ahead with an offer for sale unless we were satisfied that the selling price represented fair value for the taxpayer. I made it clear in Committee that we would not arrange the sale of shares merely to meet a timetable. I made our objectives clear and said that we were anxious to obtain the best possible price.
The Government are determined to ensure that the taxpayer benefits fully and fairly from the sale of Britoil shares. An independent evaluation of Britoil's North Sea assets will be available from the consulting petroleum engineers Energy Resources Consultants Limited in advance of the sale. On the basis of the consultants' report and the advice that we received from our merchant bank advisers S. G. Warburg and Co. Ltd., the Government will be able to form a clear and balanced view of the value of the shares.
In addition, we shall look closely with our advisers at the market valuation of other oil companies, particularly those with North Sea interests. The House need be in no doubt that our valuation of the shares will be careful and thorough.
I wish to add another point relating to the practicability of laying a valuation of shares before the House. The carrying through of the Britoil offer must be a matter for executive action by the Government. The preparations leading up to the offer should not be carried out in the glare of publicity.
After all, the flotation will be an exercise of great complexity, which will require months of exacting preparatory work by experts before it is ready to go ahead. Many of the documents will entail heavy legal responsibility and much effort, care and thought will be needed in their compilation.

Mr. Dalyell: This is humbug.

Mr. Gray: It may be humbug to the hon. Member for West Lothian (Mr. Dalyell), but anyone who has been associated with a flotation will know the care that needs to be taken with such documents.
My Department will be obtaining a detailed report on the oil assets of Britoil from independent petroleum engineers. The prospectus that will be published at the time of the offer will include an evaluation of the principal assets of the company. It will be carefully considered in the light of the legal responsibilities that all involved in the offer, including the Secretary of State and the Britoil directors, will bear for it.
It would be wrong for the Government to anticipate the prospectus by publishing their valuation of assets in advance. A number of hon. Members raised that subject in Committee. For any such valuation to become available before shares are sold could be harmful to our objective of obtaining a fair price for the nation.
To sum up, some aspects of the sale of Britoil shares can be decided only nearer the time of the sale, but I assure the House that we will want shares to be available to a wide spread of the public and to small investors as well as to employees of the company. We are determined to obtain


a fair price and we shall make sure that the shares are valued carefully and with the benefit of professional advice.
The Government have been open and fair in explaining their aims and objectives in the privatisation of Britoil. It would have been wrong for us to do otherwise, and I believe that we are on the right course. The requirements that the new clause would impose are unnecessary and it would be wrong for the House to accept it.

Mr. Frank Hooley: The Labour Party has made it clear that it opposes asset-stripping and the new clause should be read in that context. We have also made it clear that a future Labour Goverment will reverse the process and ensure that speculative gains are not made out of it. The process is inherently corrupt. The so-called privatisation is a process of handing over public assets to private individuals or groups of individuals for their own personal or group profit. That is the fundmental objection to it.
6.45 pm
If Conservative Members argue that there is some risk involved, they had better look at the record. They know that the assets that they are handing over—British Aerospace, Cable and Wireless and Amersham International—are precisely the sorts of assets from which those who acquire them expect to make substantial personal profits. The Goverment have no intention of putting on the market British Rail or other public assets on which there is no prospect of investors making personal profits.
The process of privatisation is inherently corrupt and the corruption can be seen in the Amersham International scandal. That deal was a swindle of the taxpayer, as can be proved by the fact that long before the sale took place commentators were saying that there would be massive applications in the expectation of immediate and huge profits. And that is precisely what happened.
The Government have made much play of the small investor, but if they were really concerned about the small investor, by which they presumably mean the individual citizen, they would leave great public assets in public ownership, because only in that way can the ordinary citizen hope to gain an equitable share in enormously valuable public property.
Unless the Government have some weird idea of breaking public assets into 35 million pieces so that every citizen can have a piece—and the Government are not suggesting anything remotely approaching that—their so-called concern For the small investor is sheer hypocrisy. The Minister of State confirmed earlier that the employees, about which Conservatives profess to be so concerned, got only 3 per cent. of the Amersham International shares. Even the small investors got only 22 per cent. and the big boys who got 75 per cent. of the shares, made the killing on the deal.
That is why I describe the privatisation process as corrupt. It is a disgraceful corruption of the process of government in this country and for that reason alone it should be brought to a halt.
There is a particularly damaging aspect of the Bill and a particular reason why Parliament should have at least some say in the method of the sale of shares and their valuation. We are selling natural resources. It could be argued that various people contributed to the building up of the value of Amersham International, but the sale that

is proposed in the Bill is that of natural resources—oil and gas—which belong to no one but the community as a whole.
We are attempting to sell the control and disposition of natural resources of all the people of this country, and the only reason for the sale is that those who buy shares expect to make a personal profit. There is no other reason why they should buy them. Even Conservative Members will hardly claim that those who buy the shares under this system do so in the hope of making a loss or out of sheer philanthropy. The only possible motive here is that the people, groups or corporations who acquire these shares do so because of their intention to make a personal profit, which is to come out of a natural resource that belongs to the whole country.
We are dealing here, as we were with Amersham and British Aerospace, with an area of high technology, an area where public investment over the years—in the case of gas, over decades—has involved research and development at a cost to public funds which cannot seriously be valued in cash. What we have is a coherent enterprise, built up by public money over a long period, the assets of which consist not just of buildings and equipment, but of the scientific knowledge and the engineering skill of the people involved. No true valuation can be put on that.
The Opposition are fundamentally opposed to this kind of swindle of the public purse, but if, through the statutory process, it has been agreed by Parliament that the assets should be stripped and public property should be given away for private profit—which is what Government Members want—then, at the very least, the new clause is justified. Parliament should at least be able to determine certain ground rules to prevent the deplorable scandal that occurred in the Amersham case and of which, in their hearts, Government Members are ashamed. Fundamentally, the Conservative Party is ashamed of the Amersham swindle, which involved paying huge commissions to people who were either grossly incompetent or grossly corrupt in the advice that they gave to the Government.
The very minimum that the Government should accept, therefore, is the proposition contained in the new clause, which is that Parliament should determine the ground rules if this sale is to take place in order to prevent a second swindle of the public purse.

Mr. Michael Morris: I will not follow the hon. Member for Sheffield, Heeley (Mr. Hooley) any more than I suspect his Front Bench would wish to follow him, because the primary charge the hon. Member for Merthyr Tydfil (Mr. Rowlands) made was that the Government had been incompetent. Given the sort of speech we have had to listen to, does the hon. Member for Merthyr Tydfil not agree that the issues were all highly successful, since there is a threat over the market that a Labour Government would renationalise without compensation in some cases and with minimal compensation in others, while the SDP policy, if I understand it, is to provide a degree of market compensation? Against such a background, the launching of British Aerospace, Cable and Wireless and Amersham International, although oversubscribed, was a major success.
I ask my hon. Friend the Minister of State to give his attention to the combination of underwriting costs and the setting of the price of the issue, and the role of the Bank


of England. I hope this sale is part of a rolling programme. I shall certainly be putting pressure on my right hon. and hon. Friends to speed up the process of denationalisation. If anything, it has been going too slowly and I criticise them for that. In that rolling programme I hope that the role of the Bank of England will be considered. There is evidence that, with the BP sale, in which the Bank of England was involved, the issue price was achieved at a more equitable cost, maximising the return to the public, even though much of it was conducted on a placing basis.
I come next to timing. The hon. Member for Merthyr Tydfil is playing for time when he suggests that we should delay denationalisation. He hopes that eventually there will be a general election and that the privatisation will not, therefore, take place. The current value of the asset within the industry is not the only relevant factor. Also relevant is the price that the asset will realise in relation to the Government's prevailing overall economic strategy. I might like the old-age pension to be increased by another 1 per cent. In order to achieve that, I might be prepared to sell Britoil at a discount, without maximising the resources, because that might be a better objective.
I ask my hon. Friend the Minister of State to disregard the Opposition's suggestions on this issue. They are similar to their views on direct labour—and we have all heard about direct labour and its efficiency. Instead he should remember that the overall economic context is important in deciding the timing.
My hon. Friend is right to listen to Parliament, to listen to the debate here and to listen to the Opposition. They could choose to devote half of a Supply Day to the issue, although they did not do so before. Instead the matter was raised in an application for an Adjournment debate by the right hon. Member for Leeds, South (Mr. Rees). The Government should certainly listen but, once the decisions are made and detailed negotiations are under way, it would not be right for individual political interference to take place.

Mr. Douglas: I know and respect the hon. Member for Northampton, South (Mr. Michael Morris) as a member of the Public Accounts Committee. It would be wrong of me to comment on reports that will be published shortly in relation to British Aerospace, but I have to say to him that some of his remarks will not be borne out by the substance of the report which the all-party Public Accounts Committee will publish in relation to that particular venture, or by the views that the Committee will express on Government sales of public assets.
I say this by way of a challenge, because this is an issue that ought to concern both sides of the House, whether we favour the sale of public assets or not. The Government are entitled to use their majority to carry through their policy, but they are not entitled to confuse the electorate by embarking on mixed policies.
My hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) indicated that great difficulties lie ahead if the Government say they want to maximise the return to the public purse but, at the same time, they want to ensure the widest possible ownership of the equity of the assets. Even greater difficulties are encountered when one is dealing with, for example, the British National Oil Corporation. The Minister of State quoted Mr. Lovegrove's book. I ask the Minister of State, even at this juncture, to name one

authority that says that the British National Oil Corporation will be more valuable if it is split up and sold as a disintegrated organisation. To put this asset on the Stock Exchange in a way that denies the logic of the industry devalues the asset at a stroke, and the Minister of State knows it.
In addition, the Minister of State knows that he is acting against the concerted advice of the board of the British National Oil Corporation. The hon. Member for Derbyshire, South-East (Mr. Rost) referred to our giving political advice. How are we going to give that political advice—behind your Chair, Mr. Deputy Speaker? In the Minister's office? Or on the Floor of the House? This is the place in which to give political advice, and if one is to do so one must have information. The Minister of State has indicated to us that all sorts of information will be available. There will be an independent survey but there is no indication that that survey, by eminent petroleum economists, will be made available to the Members of this House. How are we going to make a judgment? Will he give us an indication of that? That would, I imagine, be part of the prospectus. The prospectus has to be made public. Why should we not get an indication of the value of the public assets?
The Minister of State is knowledgeable about the oil industry. The Government and the Secretary of State are addicted to selling the assets by the end of the year. There is no way that that can be done, because of the state of the oil market. The Minister of State is hedging and trying to put a gloss on the matter.
The new clause is eminently fair and in the public interest. All hon. Members—.

It being Seven o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order [8 March] and the Resolution this day, to put forthwith the Question already proposed from the Chair.

Question put, That the clause be read a Second time:—

The House divided: Ayes 214, Noes 275.

Division No. 114]
[7 pm


AYES


Abse, Leo
Coleman, Donald


Allaun, Frank
Concannon, Rt Hon J. D.


Alton, David
Cook, Robin F.


Anderson, Donald
Cowans, Harry


Archer, Rt Hon Peter
Cox, T. (W'dsw'th, Toot'g)


Ashley, Rt Hon Jack
Craigen, J. M. (G'gow, M'hill)


Ashton, Joe
Crowther, Stan


Atkinson, N. (H 'gey,)
Cryer, Bob


Bagier, Gordon A.T.
Cunliffe, Lawrence


Barnett, Rt Hon Joel (H'wd)
Cunningham, Dr J. (W'h'n)


Beith, A, J.
Dalyell, Tam


Benn, Rt Hon Tony
Davidson, Arthur


Bennett, Andrew (St'kp'tN)
Davies, Rt Hon Denzil (L'lli)


Bidwell, Sydney
Davies, Ifor (Gower)


Booth, Rt Hon Albert
Davis, Clinton (Hackney C)


Boothroyd, Miss Betty
Davis, Terry (B'ham, Stechf'd)


Bottomley, Rt Hon A. (M'b'ro)
Deakins, Eric


Bradley, Tom
Dean, Joseph (Leeds West)


Bray, Dr Jeremy
Dixon, Donald


Brown, Hugh D. (Provan)
Dobson, Frank


Brown, R. C. (N'castle W)
Dormand, Jack


Brown, Ron (E'burgh, Leith)
Douglas, Dick


Callaghan, Rt Hon J.
Douglas-Mann, Bruce


Callaghan, Jim (Midd't'n&amp;P)
Dubs, Alfred


Campbell, Ian
Duffy, A. E. P.


Canavan, Dennis
Dunn, James A.


Cant, R. B.
Dunwoody, Hon Mrs G.


Carmichael, Neil
Eadie, Alex


Cartwright, John
Eastham, Ken


Clark, Dr David (S Shields)
Edwards, R. (W'hampt'n S E)


Cocks, Rt Hon M. (B'stol S)
Ellis, R. (NE D'bysh're)






Ellis, Tom (Wrexham)
Morris, Rt Hon C. (O'shaw)


English, Michael
Morris, Rt Hon J. (Aberavon)


Evans, Ioan (Aberdare)
Morton, George


Evans, John (Newton)
Moyle, Rt Hon Roland


Faulds, Andrew
Newens, Stanley


Field, Frank
O'Halloran, Michael


Fletcher, Ted (Darlington)
O'Neill, Martin


Ford, Ben
Owen, Rt Hon Dr David


Forrester, John
Park, George


Foster, Derek
Parker, John


Foulkes, George
Parry, Robert


Fraser, J. (Lamb'th, N'w'd)
Pendry, Tom


Freud, Clement
Penhaligon, David


Garrett, John (Norwich S)
Powell, Raymond (Ogmore)


Garrett, W. E. (Wallsend)
Prescott, John


George, Bruce
Race, Reg


Golding, John
Radice, Giles


Graham, Ted
Rees, Rt Hon M (Leeds S)


Grant, George (Morpeth)
Richardson, Jo


Grant, John (Islington C)
Roberts, Albert(Normanton,)


Grimond, Rt Hon J.
Roberts, Gwilym (Cannock)


Hamilton, W. W. (C'tral Fife)
Robertson, George


Harrison, Rt Hon Walter
Robinson, G. (Coventry NW)


Hart, Rt Hon Dame Judith
Robinson, P. (Belfast E)


Hattersley, Rt Hon Roy
Rooker, J. W.


Haynes, Frank
Roper, John


Heffer, Eric S.
Rowlands, Ted


Hogg, N. (E Dunb't'nshire)
Ryman, John


Holland, S. (L 'b'th, Vauxh'll)
Sandelson, Neville


Home Robertson, John
Sever, John


Homewood, William
Sheerman, Barry


Hooley, Frank
Sheldon, Rt Hon R.


Horam, John
Shore, Rt Hon Peter


Howell, Rt Hon D.
Short, Mrs Renée


Howells, Geraint
Silkin, Rt Hon J. (Deptford)


Hoyle, Douglas
Silkin, Rt Hon S. C. (Dulwich)


Huckfield, Les
Silverman, Julius


Hughes, Mark (Durham)
Skinner, Dennis


Hughes, Robert (Aberdeen N)
Smith, Rt Hon J. (N Lanark)


Janner, Hon Greville
Soley, Clive


Jay, Rt Hon Douglas
Spearing, Nigel


Johnson, Walter (Derby S)
Spriggs, Leslie


Jones, Rt Hon Alec (Rh'dda)
Stallard, A. W.


Jones, Barry (East Flint)
Steel, Rt Hon David


Jenkins, Rt. Hon. Roy
Stewart, Rt Hon D. (W Isles)


Kerr, Russell
Stoddart, David


Kilfedder, James A.
Stott, Roger


Kilroy-Silk, Robert
Strang, Gavin


Lambie, David
Straw, Jack


Lamborn, Harry
Summerskill, Hon Dr Shirley


Lamond, James
Taylor, Mrs Ann (Bolton W)


Leadbitter, Ted
Thomas, Dr R. (Carmarthen)


Lewis, Arthur (N'ham NW)
Thorne, Stan (Preston South)


Lewis, Ron (Carlisle)
Tilley, John


Lofthouse, Geoffrey
Tinn, James


Lyon, Alexander (York)
Torney, Tom


McCartney, Hugh
Varley, Rt Hon Eric G.


McElhone, Frank
Wainwright, E. (Dearne V)


McKay, Allen (Penistone)
Wainwright, R. (Colne V)


MacKenzie, Rt Hon Gregor
Walker, Rt Hon H. (D'caster)


McNally, Thomas
Welsh, Michael


McNamara, Kevin
White, Frank R.


McTaggart, Robert
White, J. (G'gow Pollok)


Marks, Kenneth
Whitehead, Phillip


Marshall, D (G 'gowS'ton)
Whitlock, William


Marshall, Dr Edmund (Goole)
Wigley, Dafydd


Marshall, Jim (Leicester S)
Willey, Rt Hon Frederick


Martin, M (G'gow S'burn)
Williams, Rt Hon A. (S'sea W)


Mason, Rt Hon Roy
Wilson, Gordon (Dundee E)


Maxton, John
Wilson, William (C'try SE)


Maynard, Miss Joan
Winnick, David


Meacher, Michael
Woodall, Alec


Mellish, Rt Hon Robert
Woolmer, Kenneth


Millan, Rt Hon Bruce
Wright, Sheila


Miller, Dr M, S. (E Kilbride)



Mitchell, Austin (Grimsby)
Tellers for the Ayes:


Mitchell, R, C. (Soton Itchen)
Mr. Ron Leighton and Mr. James Hamilton.


Morris, Rt Hon A. (W'shawe)






NOES


Adley, Robert
Finsberg, Geoffrey


Aitken, Jonathan
Fisher, Sir Nigel


Alexander, Richard
Fletcher, A. (Ed'nb'gh N)


Alison, RtHon Michael
Fletcher-Cooke, SirCharles


Amery, Rt Hon Julian
Fookes, Miss Janet


Ancram, Michael
Forman, Nigel


Arnold, Tom
Fowler, Rt Hon Norman


Aspinwall, Jack
Fox, Marcus


Atkins, Rt Hon H.(S'thorne)
Fraser, Peter (South Angus)


Atkins, Robert (Preston N)
Fry, Peter


Baker, Nicholas (N Dorset)
Gardiner, George (Reigate)


Banks, Robert
Gardner, Edward (S Fylde)


Beaumont-Dark, Anthony
Garel-Jones, Tristan


Bendall, Vivian
Gilmour, Rt Hon Sir Ian


Benyon, W. (Buckingham)
Glyn, Dr Alan


Best, Keith
Goodhart, Sir Philip


Bevan, David Gilroy
Goodhew, Sir Victor


Biffen, Rt Hon John
Goodlad, Alastair


Biggs-Davison, Sir John
Gorst, John


Blackburn, John
Gow, Ian


Blaker, Peter
Grant, Anthony (Harrow C)


Body, Richard
Gray, Hamish


Bonsor, Sir Nicholas
Griffiths, E.(B'y St. Edm'ds)


Boscawen, Hon Robert
Griffiths, Peter Portsm'th N)


Bottomley, Peter (W'wich W)
Grist, Ian


Bowden, Andrew
Grylls, Michael


Boyson, Dr Rhodes
Gummer, John Selwyn


Braine, Sir Bernard
Hamilton, Hon A.


Bright, Graham
Hamilton, Michael (Salisbury)


Brittan, Rt. Hon. Leon
Hampson, Dr Keith


Brooke, Hon Peter
Hannam, John


Brotherton, Michael
Haselhurst, Alan


Brown, Michael (Brigg&amp;Sc'n)
Havers, Rt Hon Sir Michael


Browne, John (Winchester)
Hawkins, Paul


Bruce-Gardyne, John
Hawksley, Warren


Bryan, Sir Paul
Hayhoe, Barney


Buck, Antony
Heddle, John


Budgen, Nick
Henderson, Barry


Bulmer, Esmond
Heseltine, Rt Hon Michael


Burden, Sir Frederick
Hicks, Robert


Butcher, John
Higgins, Rt Hon Terence L.


Butler, Hon Adam
Hogg, Hon Douglas (Gr'th'm)


Cadbury, Jocelyn
Holland, Philip (Carlton)


Carlisle, John (Luton West)
Hooson, Tom


Carlisle, Kenneth (Lincoln)
Hordern, Peter


Carlisle, Rt Hon M. (R'c'n)
Howe, Rt Hon Sir Geoffrey


Chalker, Mrs. Lynda
Howell, Rt Hon D. (G'ldf'd)


Channon, Rt. Hon. Paul
Howell, Ralph (N Norfolk)


Chapman, Sydney
Hunt, David (Wirral)


Churchill, W. S.
Hunt, John (Ravensbourne)


Clark, Hon A. (Plym'th, S'n)
Hurd, Rt Hon Douglas


Clark, Sir W. (Croydon S)
Irving, Charles (Cheltenham)


Clarke, Kenneth (Rushcliffe)
Jessel, Toby


Cockeram, Eric
Johnson Smith, Geoffrey


Colvin, Michael
Jopling, Rt Hon Michael


Cope, John
Joseph, Rt Hon Sir Keith


Corrie, John
Kaberry, Sir Donald


Costain, Sir Albert
Kershaw, Sir Anthony


Cranborne, Viscount
Kitson, Sir Timothy


Critchley, Julian
Lamont, Norman


Dean, Paul (North Somerset)
Lang, Ian


Dickens, Geoffrey
Latham, Michael


Dorrell, Stephen
Lawrence, Ivan


Douglas-Hamilton, Lord J.
Lee, John


Dover, Denshore
Le Marchant, Spencer


du Cann, Rt Hon Edward
Lennox-Boyd, Hon Mark


Dunn, Robert (Dartford)
Lester, Jim (Beeston)


Dykes, Hugh
Lewis, Kenneth (Rutland)


Eden, Rt Hon Sir John
Lloyd, Ian (Havant &amp; W'loo)


Edwards, Rt Hon N. (P'broke)
Lloyd, Peter (Fareham)


Eggar, Tim
Loveridge, John


Elliott, SirWilliam
Lyell, Nicholas


Emery, Sir Peter
Macfarlane, Neil


Eyre, Reginald
MacGregor, John


Fairbairn, Nicholas
MacKay, John (Argyll)


Fairgrieve, Sir Russell
Macmillan, Rt Hon M.


Faith, MrsSheila
McNair-Wilson, M. (N'bury)


Farr, John
McNair-Wilson, P. (New F'st)


Fell, Sir Anthony
McQuarrie, Albert






Marland, Paul
Shelton, William (Streatham)


Marshall, Michael (Arundel)
Shepherd, Colin (Hereford)


Marten, Rt Hon Neil
Shepherd, Richard


Mates, Michael
Silvester, Fred


Maude, Rt Hon Sir Angus
Sims, Roger


Mawhinney, Dr Brian
Skeet, T. H. H.


Maxwell-Hyslop, Robin
Speed, Keith


Mayhew, Patrick
Spence, John


Mellor, David
Spicer, Jim (West Dorset)


Meyer, Sir Anthony
Spicer, Michael (S Worcs)


Miller, Hal (B'grove)
Sproat, Iain


Mills, Iain (Meriden)
Squire, Robin


Mills, Peter (West Devon)
Stainton, Keith


Miscampbell, Norman
Stanbrook, Ivor


Moate, Roger
Stanley, John


Monro, Sir Hector
Steen, Anthony


Montgomery, Fergus
Stevens, Martin


Moore, John
Stewart, A. (E Renfrewshire)


Morris, M. (N'hampton S)
Stewart, Ian (Hitchin)


Morrison, Hon C. (Devizes)
Stokes, John


Mudd, David
Stradling Thomas, J.


Murphy, Christopher
Tapsell, Peter


Myles, David
Taylor, Teddy (S'end E)


Neale, Gerrard
Tebbit, Rt Hon Norman


Neubert, Michael
Temple-Morris, Peter


Newton, Tony
Thatcher, Rt Hon Mrs M.


Normanton, Tom
Thomas, Rt Hon Peter


Nott, Rt Hon John
Thompson, Donald


Onslow, Cranley
Thornton, Malcolm


Oppenheim, Rt Hon Mrs S.
Townend, John (Bridlington)


Osborn, John
Trippier, David


Page, John (Harrow, West)
Trotter, Neville


Page, Richard (SW Herts)
van Straubenzee, Sir W.


Parris, Matthew
Vaughan, Dr Gerard


Patten, Christopher (Bath)
Viggers, Peter


Patten, John (Oxford)
Waddington, David


Pattie, Geoffrey
Wakeham, John


Pawsey, James
Waldegrave, HonWilliam


Percival, Sir Ian
Walker, B. (Perth)


Peyton, Rt Hon John
Walker-Smith, Rt Hon Sir D.


Pollock, Alexander
Wall, Sir Patrick


Porter, Barry
Waller, Gary


Prentice, Rt Hon Reg
Walters, Dennis


Proctor, K. Harvey
Ward, John


Pym, Rt Hon Francis
Warren, Kenneth


Rathbone, Tim
Wells, Bowen


Rees-Davies, W. R.
Wells, John (Maidstone)


Renton, Tim
Wheeler, John


Rhodes James, Robert
Whitelaw, Rt Hon William


Rhys Williams, SirBrandon
Whitney, Raymond


Ridley, HonNicholas
Wickenden, Keith


Rippon, Rt HonGeoffrey
Wiggin, Jerry


Roberts, M. (Cardiff NW)
Wilkinson, John


Roberts, Wyn (Conway)
Winterton, Nicholas


Rossi, Hugh
Wolfson, Mark


Rost, Peter
Younger, Rt Hon George


Royle, Sir Anthony



Sainsbury, Hon Timothy
Tellers for the Noes:


St. John-Stevas, Rt Hon N.
Mr. Anthony Berry and Mr. Carol Mather.


Shaw, Giles (Pudsey)



Shaw, Michael (Scarborough)

Question accordingly negatived

Clause 12

SUPPLY OF GAS BY OTHER PERSONS

Mr. Dalyell: I beg to move amendment No. 6, in page 13, line 12, leave out 'Subject to section 29A below'.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take amendment No. 7, in page 14, line 14, leave out from beginning to end of line 4 on page 15, and Government amendment No. 8.

Mr. Dalyell: Our amendment would simplify the clause by creating a two-tier rather than a three-tier

structure. It would create a backstop to ensure that all supplies are subject to the Secretary of State's consent. It is an insurance policy if things go wrong. It in no way impinges on the other provisions in the Bill. It simply gives the Secretary of State powers to take control, if necessary.
In a perfect market there may not be any need for intervention, but the gas market is not perfect. There is uncertainty. In Committee on 9 March the Secretary of State concurred with my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands), who said that anyone who forecast more than three months ahead was a fool. That applies not merely to prices, but to how much oil and gas are available. We do not know how much gas there is in the North Sea. We know that there would be severe problems if gas were used up too quickly and expensive alternatives had to be found if it looked like running out. Can we imagine the outcry if we had to switch to other fuels, involving massive investment in distribution?
7.15 pm
If the Government are serious about their assurances on the depletion policy, why can they not be enshrined in the legislation? My colleagues will have noticed that the Secretary of State waxed eloquent and righteous on the assurances. What is the objection to putting the assurances in the legislation? It is very puzzling. In all those hours in Committee, when so many amendments moved by my right hon. and hon. Friends were rejected, we were never let into the secret of why they could not be accepted. Instead, assurances were given.
If the Government are willing to give assurances, why can they not be put in black and white in legislative form so that the courts can do the interpretation? However eloquent the speeches of my right hon. Friend the Member for Leeds, South (Mr. Rees), my hon. Friend the Member for Merthyr Tydfil, my hon. Friend the Member for Dunfermline (Mr. Douglas) and others, no court of law will read meticulously those speeches and the Government's replies. That is why, not only on this issue, but on compatibility and negotiations with the British Gas Corporation before anything happens, something ought to be written into the Bill.
The Government cannot make the objection that the amendment would somehow prevent market forces from working. It would give the Secretary of State power, which he does not have under the Bill as drafted, to operate a depletion policy. The Secretary of State says that this is unnecessary because he has powers under the Petroleum and Submarine Pipe-Lines Act 1975. The Opposition do not agree. The Secretary of State can restrict flaring, but Ministers cannot tell the House that by restricting flaring they are implementing a depletion policy. Flaring is about the prevention of waste and the conservation of valuable resources. It has nothing to do with producing an orderly depletion policy.
The Secretary of State said:
It is entirely right and proper that the Government of the day, rather than some nationalised industry, should decide whether a depletion policy is in the national interest, and, if so, what that policy should be."—[Official Report, Standing Committee E, 9 March 1982; c. 799.]
That is precisely what our amendment proposes. Even if the Government have difficulty in accepting other amendments, surely they can accept this one, because it


is precisely on the point that they say is important and acceptable. It would help them to do what in their own terms they say they want to do.
The 1975 Act does not give the Secretary of State the powers that he needs. It stops at the beach, and understandably so. That is why the 1975 Act was so designed. It was not designed to cover this situation. It is always unsatisfactory to go back to an Act that was designed to cover one situation and say that it should cover a new situation which was not anticipated when the measure was going through Parliament.
The 1975 Act does not cover the inshore use of gas. It is at best an imperfect instrument. It can only control offshore development and, to an extremely limited extent, production. There is a long time lag between the decisions on development and the gas coming on stream. That time barrier must be taken into account. The 1975 Act is inadequate for what the Government say they want to do.
The amendment places control in the Government's hands—not in the hands of the British Gas Corporation, which is where the Secretary of State himself says that it should lie. The Secretary of State himself makes the case for our amendment. Without more ado, I invite the Minister to rise and accept it as graciously as possible. The Government can, and indeed ought, to accept it. Having moved the amendment succinctly, the Opposition reserve the right to come back if the Minister's reply is less than favourable.

Mr. Robert C. Brown: I support amendments Nos. 6 and 7. They are crucial to the Bill and to the future of both the British Gas Corporation and what passes as the Government's energy policy. We have stated forcefully, in the Chamber and in Committee, our opposition to the Bill. Given the Government's inbuilt, almost automaton-like majority, however, the amendments are designed to minimise the damage that this very bad Bill will do to the nation and national life.
British is fortunate to have several indigenous sources of energy—coal, gas and oil. We are assured that coal will not run out for several generations, but that should not lead us to assume that we can squander our other indigenous sources of supply. For coal to be a viable form of energy, mines must be developed. Such development takes at least 12 years, and who knows how many Dukes of Rutland there are and whether the National Coal Board's experience in the Vale of Belvoir will be repeated. In that case, 12 years for development fades into insignificance—it could be 15 or 20 years before the deep-mine coal that we shall need in future will start to appear.
When mines are developed, we should ensure also that the maximum possible quantity of coal is extracted. The cost of sinking new deep mines, such as at Selby, is enormous. That process is anything but rapid. I accept that there are more rapid methods of obtaining coal, but the express method of pulling coal out of the bowels of the earth destroys the very source that we are mining. Such considerations become pertinent when one takes account of the Bill's provisions. That is one of my reasons for strongly supporting the amendment.
It is said that there are still about 17 trillion cu. ft. of natural gas under the North Sea. More may be discovered. Only a fool would say that there is no possibility of further discoveries of natural gas. No doubt we all hope that the 17 trillion cu. ft. are an underestimate and that we shall

discover much more, but we cannot rely on that. Even with the so-called magic wand of the Bill, there is absolutely no guarantee that we shall be able to pull out the 17 trillion cu. ft. that are supposed to be under the North Sea.
At the current rate of depletion, those gas reserves will last for a maximum of 25 years. In the lifetime of a nation, 25 years is nothing. Indeed, with increased longevity that is not even one lifetime today. The figures are not somehow whistled out of the air. They are part of the necessary planning that the British Gas Corporation does and submits annually to the Secretary of State. More important anxieties arise. If gas reserves will last only for another generation, we should be seriously concerned about its uses.
It is by now almost conventional wisdom that, because of the scarcity of other fuels, gas should be used efficiently. That means that gas should be used in the premium markets. That is, first, in the areas where gas is the only sensible fue—for example, where there is a need for tight temperature control and its use is not easily substituted. Secondly, gas should be used for the domestic market. It is accepted by all—except, it seems, the Secretary of State and the Government—that for bulk steam raising coal is the obvious and more appropriate fuel. Yet the Government are ambivalent about this aspect. On the one hand, they have made considerable sums of money available in grants to convert industrial boilers to coal, and I applaud them for that. On the other hand, however, they are promoting a Bill which effectively allows the unrestricted use of gas.
Once the Bill is passed, it will not matter what people decide to use gas for—steam raising or any other industrial process. They will be able to use it without let or hindrance. That is a criminal betrayal of the nation and an utter waste of our natural assets. If gas is to be allowed to be sold to any industry irrespective of use, not only will severe damage be done to the coal industry, which is trying to build up its industrial market, but gas will run out considerably faster and the 25 years may become a substantial overestimate.
As a result of the Bill, the coal that we need and will continue to need will not exist, because the unrestricted use of gas will force the British coal industry to run down. What will then happen? There is only one answer. We shall be forced to scramble for coal, thus doing irreparable harm to coal stocks. Worse than that, unlimited depletion will mean that, as the coal industry will be damaged, the substitute natural gas programme will simply not be ready in time. At the moment the plan is to use SNG for natural gas in the mid-1990s. That programme depends upon a viable coal industry.
The unlimited use of gas for steam raising will mean that the coal will simply not be there, and nor will the gas. That will have devastating and dire consequences both for industry and for domestic consumers—and all for a short-term advantage for the Government. As I said when we debated the gas levy yesterday, the Government are more interested in a major contribution to the PSBR to facilitate the giving of a tax handout in the Budget leading up to the general election than in the future welfare of the country.
7.30 pm
I see that the Untler-Secretary of State is already getting excited. He will no doubt accuse me of gross scaremongering—a view with which I might have some sympathy, although I would be the accused. Nevertheless


if the new section 29A is allowed to stand, the situation that I have described could arise. A more likely scenario, however, is that the oil companies will be able to apply the screw to gas prices, armed with the powers of unlimited sales over 2 million therms. As the Bill stands, the figure is 1 million, but I am grateful to see from Government amendment No. 8 that the Minister is prepared to honour the commitment that he made in Committee when I sought to change the figure from 1 million to 3 million. As I said in Committee, I am grateful for half a loaf rather than none, and I compliment the Under-Secretary of State on having seen the folly of the authors of the Bill in setting the figure at 1 million therms in the first place.
If section 29A stands, the nation will be in the crazy situation either of running out of gas far more quickly because there is no control on depletion or fuel substitution, with all the damage that that would cause, or of allowing price to be the determinant of energy policy. Neither is acceptable, and letting price determine how our finite resources should be used is lunacy in anyone's language.
It is also unacceptable that, at this time, gas prices should be set to treble, which is a cautious estimate of the effect of the Bill. Given the way in which the Government have crucified British gas consumers over the past few years, it is diabolical to introduce legislation which will almost certainly treble the price of gas in the not-too-distant future.
There are many reasons why the proposed section 29A should not be accepted. As I have said, it is an incentive to energy guzzling. Even if the House rejects that view, it should take account of the other defects. A glaring defect is that the only consideration in section 29A is whether users can guzzle energy fast enough. There is no consideration of whether the supply of private gas will endanger safety or security of supply. In Committee we tried to write in safety provisions, but because there were other safety provisions of equal or greater importance we were more or less impelled to leave consideration of this issue.
The new section 29A destroys whatever pretence the Government have of an energy policy. I hope that the House will join us in throwing it out.

Mr. Rost: Member for Newcastle upon Tyne, West (Mr. Brown) seems to want to have it both ways. On the one hand, he suggests that if the new section is allowed to remain in the Bill it will allow many more consumers to have access to gas and the supplies will be used up much more quickly. On the other hand, he argues that the price of gas will treble. The hon. Gentleman seems not to be listening. Perhaps I could have his attention for a moment. He argues that many more customers will want the new gas which will become available when there is more competition, but at the same time he argues that the price will treble.
Where will all the new customers come from if gas is to be as expensive as he suggests? He cannot have it both ways. He suggests that the legislation will lead to massive energy guzzling, that the demand for gas will expand and that the supplies will be burnt up in all kinds of wasteful non-premium uses, although he believes that the price will soar to about three times the present level. He is talking

absolute nonsense. If the price rises as much as that, how does he imagine that all the new customers will be able to afford to use it? What other fuels will they be persuaded to reject in favour of this much more expensive gas so that they can waste it? If the price is to rise so much, all those consumers will continue to use their existing fuel rather than switch to a far more expensive fuel. The hon. Gentleman's argument does not bear examination.

Mr. Robert C. Brown: The hon. Gentleman is clearly not paying much attention to the affirmed basis of Toryism—the law of supply and demand. He well knows that the Bill as drafted—and there is no doubt about the Government's determination to get it on to the statute book in this form—will allow oil companies to sell direct to Continental customers gas which by rights is British, and he knows that that will happen.

Mr. Rost: The hon. Gentleman has raised a completely new issue to try to wriggle out of the collapse of his earlier argument. He now says that the oil companies will export the gas. As he will know, because he was present when the Standing Committee debated this matter at considerable length, there is no immediate intention to allow any export of gas. Some of us would argue that it should be allowed, but the Government have made it clear that until we are more than reassured that substantial new resources of gas have been discovered and are ready to be exploited, as I believe will result from the legislation, until we are assured that there is no need for a severe depletion policy because we know that there is sufficient gas for many years at present rates of consumption, there is no question of export.
I return to the justification for rejecting the amendment. It simply makes no sense. The Opposition argue on the one hand that British Gas will no longer be able to obtain all the gas that it needs to meet its domestic and industrial contracts, and that because of this legislation new gas supplies will be channelled direct to new customers. They cannot at the same time argue that the effect of the legislation will be to raise the price of gas so high as to price it out of the market. Surely it must be one or the other.
The proposed legislation will introduce more competition and provide more incentives for gas exploration and development. Much more gas will become available. British Gas will have alternative sources of supply which it does not have at present. That will stabilise rather than increase the price. New sources will be available for additional consumers, who will be offered a choice of supply. Consumers who have not been offered supplies by British Gas, because it is said that there is not enough gas available, will in some instances have the opportunity of contracting for supplies.
To argue that all this gas will be burnt inefficiently is inconsistent with the laws of economics. Gas will continue to be a premium fuel because it has a premium value as an energy source. Therefore, it will continue to command a premium price. No consumer who wants to remain in business, whether industrial or commercial, will be able to use gas wastefully.
In supporting the proposed legislation, I strongly argued that British Gas had abused its monopoly powers. It has used the excuse that it must continue to reserve supplies for the so-called premium market. That excuse was used to prevent the most efficient use of gas. It is


obvious that there are more efficient ways of using gas than by burning it in homes to provide central heating, and in the other ways in which it is burnt in boilers. That is efficient, but it is more efficient for gas to be burnt in combined cycle burners, where it produces both electricity and heat. However, British Gas has prevented that from happening because it would have been in competition with its own marketing objectives of selling gas to domestic consumers rather than allowing them the opportunity of having district heating that is a by-product of electricity generation.
The proposed legislation will encourage the more efficient use of gas and provide an alternative market. British Gas has prevented the efficient development of a market for industries and commercial establishments that want to burn gas to produce electricity and heat combined, as happens in other countries. That is without question the most efficient way in which gas can be consumed as a fuel. Therefore, it should not be discouraged. More effective development will follow from the competition which will result if the legislation is enacted.

Mr. Robert C. Brown: We must not get obsessed with the idea of using gas in combined heat and power schemes. In my native city of Newcastle the Government are considering a combined heat and power scheme. In a new development a combined heat and power scheme is feasible. However, in an old established development, such as the city centre of Newcastle, the capital expenditure and disruption necessary to put in the services from the power station would be enormous. We are a long way from the first major combined heat and power scheme.

Mr. Rost: We have heard that argument before. It is used by those who wish to prevent the public from having an opportunity of much cheaper heat than has hitherto been available. The disruption caused by laying hot water pipes into a city is no more than the disruption caused when British Gas lays pipes to supply gas to houses. The hon. Gentleman has only to look to Europe to see how the consumer is benefiting from cheaper heating in homes because it is a by-product from the production of electricity. There is no question but that it is feasible and cost effective. This is one important premium use for gas which other countries have found to be the most valuable and cheapest form of using energy and providing heat for the consumer.
7.45 pm
British Gas was given a monopoly by Parliament and was, therefore, perfectly entitled to develop and exploit it. However, that has not been in the consumers' best interests because it has prevented the alternative development of even more efficient forms of heating, as have been developed on the Continent, through the combined production of heat and power. The Bill will allow the economic advantages of that form of energy use to become more self-evident. For that reason alone the Bill, when enacted, will be to the consumers' longer term advantage.

Mr. Harry Cowans: I listened to the argument of the hon. Member for Derbyshire, South-East (Mr. Rost) with great care. In my view, the entire Bill is nonsense. It does nothing for the gas and coal industries. Indeed, it seeks to destroy them both. The amendment's aim is to save the Government

from themselves. Its purpose is to take the sting out of the Bill. The Opposition seek to maintain the gas and oil industries and not destroy them; the Government seemingly wish to destroy them both.
The hon. Member for Derbyshire, South-East spoke of other sources of supply but he neglected to identify them. I hope that he will enlighten the House when he has the opportunity to do so. Even if he gives a satisfactory answer, that will do nothing to enhance the clause.
When the Government took office they were pledged to energy conservation. The Bill will do exactly the reverse as it will allow all and sundry to squander our natural resources. We have throughout the world a premium of coal and gas and it will be nonsensical to allow it to be squandered.
The amendment's aim is to save the Government. If they had the common sense to accept it, common sense would appear in the Bill and common sense would be made out of nonsense. Even at this late stage, it is not unreasonable to ask the Government closely to consider the amendment and to accept it. Many who work in the coal and gas industries would welcome the Government's acceptance of the realities. It does not make sense to waste a natural resource. Surely it makes sense to garner and protect it. The amendment will enable us to do so, but the Bill as it stands will do the reverse. It allows all and sundry to take away that natural resource and squander it ad lib on whatever they want. The amendment seeks to alter that. If the Government had any sense they would accept it.
This Government want to squander the few natural resources that we have in our favour by giving them to private enterprise. That must be nonsense. It seems that at any time in the history of the country when coal and gas were under a central body responsible to the people to look after that resource, it made sure that it was not squandered ad lib. I have heard it said that if the amendment is not carried, and if the Bill goes through, we may have to import gas because of the squandering of this resource by private enterprise.
I speak in the hope of persuading the Government to see common sense but alas, in the absence of their leaping to their feet to say they accept the amendment, it seems that the people will be sold—

Mr. Robert C. Brown: My hon. Friend has had the hairy experience of serving on two Standing Committees at the same time over the past several weeks or months. With that experience behind him, has he any reason to suppose that he will have any more common sense from the Government now than he received in those Committees?

Mr. Cowans: I am grateful to my hon. Friend. He and I come from the same city and we have many things in common. I have to reply to that valuable intervention by saying that in the course of serving on a number of committees—he and I have walked on the Committee corridor at some late hours—our tragic experience appears to be that the Government are infected by dogma. Once their dogma is applied, any logical argument and common sense flies out of the window. The Government can hear common-sense, logical arguments but because they are so infected with dogma they cannot accept the realities of life. They came in by a democratic election—I fully accept that—to look after the interests of the country. Yet, very quickly, they are selling the country down the river.
If only, even at this late stage, the Government would have the sense to produce a rational energy policy whereby we sensibly husbanded our good resources and looked after them in the interests of the people, that would make a great deal of sense. The Bill as it is seems to be part of the dogma that because there is a nationalised concern—that takes care of gas and coal—we must get rid of it. In the interests of doing that, in the dogma that they have adopted across the board, it appears that the Government are prepared to get rid of this at any price.
The price that we shall have to pay—I hope that everybody outside the House is listening carefully—is that those resources that we have by inheritance—a natural field of gas close to our shores that should be used sparingly right across for the benefit of all, and the coal that is under the country that should be used for the benefit of the whole country—will be squandered on the altar of "profit only" and not for the best interests of the country. It seems that one would have to be a genius to be surrounded by gas and walking on coal and yet create a shortage of both so that only a few people can make a few shekels out of them. That is a very good reason why the amendment should be accepted by the Government.

The Under-Secretary of State for Energy (Mr. David Mellor): I congratulate the hon. Member for West Lothian (Mr. Dalyell) on what is, I think, the first time that he has formally moved an amendment in these proceedings, although he was a very active member of the Committee. I wish that it were possible for me to go further towards his position than I fear I shall be able to do.
I would be wrong not to pay tribute at the beginning to the speech of my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), who painted a wholly accurate picture of present-day gas. Such reality was sadly lacking in much of what we heard from the hon. Members for Newcastle upon Tyne, Central (Mr. Cowans) and for Newcastle upon Tyne, West (Mr. Brown). We do not have gas coming ashore more than the nation requires. All of it is fully contracted and there are many people who would like to use gas but are not able to obtain it.
I wish that the hon. Member for Newcastle upon Tyne, Central had been a member of the Committee that considered the Bill. I could perhaps have disabused him of one thing before now on the question of imports. He must know that more than 20 per cent. of our gas comes from Norway, and has done for most of the time that we have had North Sea gas. It is unreal to suggest that our prime concern must be to examine what gas we have and simply consider whether it is being properly used. We have to consider the way in which we are able to give some impetus for exploration for those gas resources in the North Sea which we hope will be found and brought ashore. That needs to be done in the best interests of our nation.
Before I turn to the more serious points raised by the hon. Member for West Lothian, I must say a word or two about the accusation of "guzzling". It does not sound right in their mouths for the Opposition to be talking about "guzzling", when they supported a policy, deliberately, and for the most squalid of party political reasons, of

keeping down the price of domestic gas to 30 per cent. below what it was in real terms a decade before they left office.
The hon. Member for Newcastle upon Tyne, Central coupled that with a policy of conservation, but what is the incentive for anyone using domestic gas under that price regime to value the fuel and not to use it in some of those artificial coal-gas fires with 16 per cent. efficiency? What is the incentive for people to put in roof insulation with that kind of pricing?
It is irritating when one reads in the last Government's 1977 Energy Policy Review:
The Price Code limits, being related to current costs based on cheap Southern Basin gas, have prevented prices from giving consumers signals reflecting the limited nature of this resource and the substantially higher cost of future gas supplies … Even at fully economic prices gas will still be highly competitive and the 'best buy' in the domestic market.
The allegation against the Labour Government is not that they obviously did not understand the point that we have been trying to get across in the teeth of a particularly unattractive campaign against trying to bring some reality into the market. The only way in which we will get sensible use of what is still the best buy for the domestic consumer is by a measure of de-regulation of the price of domestic gas. In that way, people will have the incentive to do some of the things that the hon. Member for Newcastle upon Tyne, Central would like, but which I fear are a long way from the reality of what he was suggesting.
Having made clear, as I hope, our view of the problems in the present gas market—too many customers chasing too few supplies—what the Bill is about is providing an incentive for more exploration. Although we may wish to have an "Alice in Wonderland" position, companies will not go at enormous cost to some of the most difficult territory in the world to extract gas if they are asked to accept a price for it which is less than the cost of extracting it. Plainly, the market must be liberated so that those who extract the gas have the opportunity to sell and distribute it.
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When I hear some of the points made by Labour Members about premium fuel and guzzling, I fear that it is a thinly disguised attack on industry, because industry is not getting the gas that it needs at the moment. Anything that is seen as a defence of the present position could only be an attack on the legitimate requirements of industry to get the gas that it needs at a difficult time.
We are also concerned to establish an effective regime whereby, having introduced competition into the gas market, the gas can be brought properly and safely to the customers. That lies at the heart of the clause.

Mr. W. E. Garrett: The Under-Secretary of State said that industry was short of gas. I said in Committee that I knew of no company that had been denied gas supplies, to the detriment of its production being maintained or extended. I have no knowledge of any company, that wishes to expand and create new jobs, that has been denied gas supplies. Will the Under-Secretary of State tonight tell the House about any company—whether major, medium or minor—that is experiencing such difficulties? In the regions supplied by the Northern Gas Board, no company has been denied supplies.

Mr. Mellor: I have the highest regard for the hon. Member for Wallsend (Mr. Garrett), but I cannot pretend


that that is the most convincing observation that I have heard him make in the House. He should understand that there are many industries, businesses and combined heat and power schemes—which my hon. Friend the Member for Derbyshire, South-East mentioned—which would wish to obtain access to gas and which cannot do so either because there are no supplies or because the position is rationalised by the industry into the doctrine of premium and non-premium use, to which I wish to turn in my reply to the central points of the hon. Member for West Lothian.
As I know the hon. Member for West Lothian understands only too well, in clause 12 we wish to establish a three-tier arrangement. First, the British Gas Corporation will retain a monopoly of supply for premises within 25 yards of its mains and taking up to 25,000 therms a year. The second category includes enterprises other than the BGC which, with the Secretary of State's consent, may supply premises taking less than the required rate but, if those premises are within 25 yards of the BGC main, they must take more than 25,000 therms a year. If the House is so minded, the required rate will be changed by amendment tonight to 2 million therms rather than 1 million therms. The third and final category is where companies other than the BGC may supply premises taking more than the required rate without the Secretary of State's consent.
We have not tried to disguise why we decided on that arrangement. It has nothing to do with the premium use of fuel. The regime that my right hon. Friend proposes, as he made clear on Second Reading, is based on safety requirements. I know that the hon. Member for West Lothian understands that. My right hon. Friend said on Second Reading:
In the case of those consumers whose premises take less than 1 million therms a year, the supply of gas will still be by the Secretary of State's consent. But I would envisage granting such consent in all cases where I was satisfied that the safety arrangements proposed were adequate."—[Official Report, 19 January 1982; Vol. 16, c. 173.]
My right hon. Friend was making it clear that the reason for erecting this part of the structure was so that the Secretary of State should have the right to consider the proposals and to decide whether, in all the circumstances, he would be prepared to permit supply. However, in essence, my right hon. Friend is concerned about safety.
My right hon. Friend has made clear his view about the premium uses of fuel. It is difficult for some of us to see the argument about the premium use of gas as anything other than a rationalisation of the corporation's difficulties. At present it is unable to supply all the customers that wish to have gas and must therefore draw up plans whereby it can differentiate between customers. At the heart of what has been said on the Government Benches is the fact that for many of the differentiations in terms of the mystique of the premium use the emperor has no clothes.
We entirely agree that it is not proper to use gas for the wide-scale generation of electricity. Section 14 of the Energy Act 1976, which implements our obligations under EEC directives, precludes that. However, there are some combined power schemes—as my hon. Friend the Member for Derbyshire, South-East made clear—where gas is highly appropriate and where it would be wrong to introduce an argument about premium or non-premium use. One is dealing with a scheme that will lead to much greater efficiency in the overall use of fuel because one

will get so much electricity and heat from it. It would be quite wrong for any mysterious device such as the premium use concept to preclude that happening.
Essentially, market and price will determine the question of premium use, which brings me to coal.

Mr. Merlyn Rees: I am a little worried about what the Under-Secretary of State is saying. During the past five to seven years, not only the British Gas Corporation has believed in what he calls the doctrine of depletion, as though it is a sort of papal bull about premium and non-premium uses. The hon. Gentleman is talking as if that will go. He says that there is no objective or logical division between the two, but that the British Gas Corporation has erected it. Because it does not have enough gas and the Morecambe field is not yet on stream, therefore the corporation erects dogma which prevents us from having a proper market-dominated system.
Is the Under-Secretary of State saying on behalf of the Government that the policy of premium and non-premium use—non-premium for steam raising and bulk heat raising—will be finished as a result of the Bill? He talked about a doctrine as though it were an erected dogma, whereas I understood that it was Government policy.

Mr. Mellor: The right hon. Gentleman is inviting me to subscribe to a more simplistic point of view than I would wish. I have already made it clear to him that we fully accept section 14 of the Energy Act 1976, which deals with steam raising. However, as well as that legal requirement, there is also the essential common sense point that very few people are likely to use gas for mass steam raising when coal is so much more economical.
As to other uses, when one talks about premium usage and getting the most out of our fuel, one must start with a sensible pricing structure. It lies at the heart of our domestic gas price policy and the deregulation that has taken place that we can now more credibly put forward insulation measures designed so that people can get more from their fuel, as against the present pricing regime when gas prices are artificially held down.
As my right hon. Friend said in Committee in a more robust and effective way than I am capable of doing, it is essentially for the market, through the relative pricings of various fuels, to decide a large part of the usage of fuels and the amount that will be consumed. However much one may try to hide behind the mystique of premium and non-premium use, on many occasions when BGC is not supplying, the probability is that it would not be able to supply even if it wanted to. There must be an element of suspicion of the kind voiced by my hon. Friend the Member for Derbyshire, South-East when we know that at the end of the day one is trying to get a pint of gas into a quart pot. There is no question of our going back on the use of gas in power stations. That remains the law.
It is perhaps appropriate at this point to deal with coal. It is at the heart of what the Government are saying that the market for gas, coal or any other form of energy ultimately hangs on its competitiveness. We are working to ensure the availability of all fuels on the keenest terms possible, consistent with the ability to maintain supply. We have maintained a solid commitment to the coal industry—I am glad that my hon. Friend the Under-Secretary of State for Energy, the Member for Croydon. Central (Mr. Moore), is present because no one has shown greater dedication to the coal industry than he and given


it the opportunity to realise the benefits of productivity and efficiency that should accrue from the massive investment that the industry has undertaken.
We believe that the tripartite structure that I have suggested is the best way to ensure that private gas supplies go forward in a way that enables the Secretary of State, using the powers in the rest of the Bill, to have an appropriate safety regime, which on the one hand properly opens up the market with the minimum bureaucratic intervention and on the other gives everyone the protection to which they are fully entitled when dealing with a substance which, if mishandled, is dangerous.
As I told the Committee when I indicated to the hon. Member for Newcastle upon Tyne, West that we were minded to uprate the limit, the question that we had to consider when drafting the Bill was the proper dividing line between those cases where consent is to be required and those where it is not. Before the original dividing line of 1 million therms a year was set, we obtained provisional data from BGC about the quantities of gas supplied within various bands to individual premises and about the type of work carried out at those premises. It was in the light of that data, and for no other reason, that in our judgment a rate of supply of 1 million therms a year was the proper rate to insert in the Bill.
We then obtained further, more reliable data from BGC, which led to some different conclusions, and as a result we think it right to increase the level to 2 million therms. I hope that the House will accept the Government amendment in that regard.

Mr. Dalyell: I welcome the last few sentences of the Minister's remarks, but perhaps I shall be forgiven if I try to interrogate him on some of the things that he said.
Was not the cat let out of the bag, because it seems that the whole concept of non-premium use has now gone out the proverbial window? It was never made that explicit in Committee. From now on, do we entertain the concept of non-premium use? That must be made explicit, because it seems to us that the concept of non-premium use has gone the way of the Dodo. If we are wrong, we should be told.
I return to the proper intervention of my hon. Friend the Member for Wallsend (Mr. Garrett) when the Minister was replying to my hon. Friends the Members for Newcastle upon Tyne, Central (Mr. Cowans) and Newcastle upon Tyne, West (Mr. Brown). Early in his speech, the Minister said that many people who use gas cannot obtain enough of it. Explicitly, in answer to my hon. Friend the Member for Wallsend, he then said that industry is not at present getting the gas it needs.
The information received by my hon. Friend the Member for Wallsend from his region in the North of England contradicts that, as does the information that I receive from Scotland. I gather that other of my hon. Friends have the same experience. Therefore, who are these folk who cannot obtain gas? They may exist, but we deserve clear examples.
I do not want to embarrass the Under-Secretary, but when we raised questions about Brush Electric we discovered that there were two sides of the coin. I am beginning to wonder whether this is another Brush Electric case.
I see a number of civil servants in the Box. They must have at their fingertips examples of those industries that want to obtain gas but cannot do so. We are asking for some examples.
I understand why the Secretary of State could not attend throughout our debate. I do not complain about that, because Sheik Yamani is not in London every day. However, the right hon. Gentleman and his hon. Friends might give careful consideration to my moderate opening speech. In the light of what has been said, perhaps the Government will return to the matter in the other place and do something to meet the points we have made. The Minister has not answered the issue upon which I dwelt at some length about providing an insurance policy in case things go wrong. This amendment creates something of a backstop, ensuring that all supplies are subject to the Secretary of State's consent. I thought the Secretary of State wanted that. It impinges in no way on the other provisions in the Bill and simply gives the Secretary of State powers, if necessary, to use them.
This amendment would be helpful to the Secretary of State if he were faced by the sort of emergency that none of us wants but which may occur. He clearly agreed in column 799 of the Standing Committee Official Report with my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) that anybody who looked forward three months and made forecasts would be a fool. However, in crises this power may be useful. I see the Secretary of State frowning to his hon. Friends. However, he spelt out in some detail, in rather eloquent words, the reasons for the amendment we are putting forward.
Flaring is no substitute for a depletion policy. Do the Government think that, by implying several times in Committee that they are doing something about flaring, they are putting forward a depletion policy? I am not a great one for yah-boo politics. However, since the Secretary of State is doing me the courtesy of listening carefully, I shall read his words:
It is entirely right and proper that the Government of the day, rather than some nationalised industry, should decide whether a depletion policy is in the national interest and, if so, what that policy should be."—[Official Report, Standing Committee E, 9 March 1982; c. 799].
That is precisely what we propose. On reflection of his remarks, the Secretary of State might want to accept the amendment.
Finally, I ask for comment on my remarks, which may be right or wrong, about the severe limitations of the powers of the Petroleum and Submarine Pipe-Lines Act 1975. That Act simply does not cover the use of onshore gas. At best, it is an imperfect instrument. All the Secretary of State can do is to control offshore development and, to a limited extent, production. There is a long time lag between decisions on development and gas coming on stream. Again, I ask that direct question about the Act and hope, after my hon. Friend's remarks, that the Minister, with the Secretary of State by his side, can give some answer.

Amendment negatived.

Amendment made: No. 8, in page 14, line 17, leave out `1,000,000' and insert '2,000,000'.—[Mr. Mellor.]

Clause 14

SAFETY REGULATIONS

Mr. Mellor: I beg to move amendment No. 9, in page 19, line 3 at end insert—
'(4A) Where in pursuance of any powers conferred by regulations made under this section, entry is made on any premises by an officer authorised by the relevant authority, the officer shall ensure that the premises are left not less secure by reason of the entry; and the relevant authority shall make good, or pay compensation for, any damage caused by the officer, or by any person accompanying him in entering the premises, in taking any action therein authorised by the regulations, or in making the premises secure.
(4B) If any person wilfully obstructs any officer exercising powers conferred by regulations made under this section, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £200.
(4C) The Rights of Entry (Gas and Electricity Boards) Act 1954 (entry under a justice's warrant) shall apply in relation to any powers of entry conferred by regulations made under this section as if—

(a) any reference to the Corporation were a reference to the relevant authority, and
(b) any reference to an employee of the Corporation were a reference to an officer authorised by the relevant authority.'.

Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take Governmet amendment No. 16.

Mr. Mellor: These amendments arise out of the most useful and constructive discussion we had in Standing Committee about safety matters and, particularly, about rights of entry. That was a somewhat maligned Committee and, perhaps rightly, observations were made that some of its discussions passed wider of the mark than some observers thought right.
Therefore, it is perhaps proper to make it clear, in relation to this discussion, that the discussion in Committee on rights of entry was most useful and managed to pinpoint a matter which the Government have been reconsidering in the intervening period. In the light of that discussion and the impetus that it gave, the Government decided to seek to commend to the House certain changes in the rights of entry. The effect of that will be to put the rights of entry conferred on officers authorised by the Secretary of State on the same basis as those already given to officers of the BGC.
Considering the matter in slightly more detail, clause14—

Mr. Merlyn Rees: The hon. Gentleman said "officers authorised by the Secretary of State." Will they be civil servants from his Department or might they be a private firm contracting to a supplier?

Mr. Mellor: It is the Secretary of State's officials. We dealt with that point in Committee. It would be improper to give certain rights of entry to private individuals, but it is plainly necessary in certain circumstances to supplement the contractual rights that will be incorporated in supply contracts about access between a private supplier and his customer with powers that the Secretary of State possesses under circumstances that I shall outline to the House in justification of the amendment.
Clause 14 re-enacts section 31 of the Gas Act 1972. That empowers the Secretary of State to make safety regulations for gas, whether it is supplied by the corporation or by others. In the case of dangers arising

from a private supply, officers authorised by the Secretary of State may be empowered to enter premises, inspect gas fittings and so on and to disconnect supplies in cases of danger, in a similar manner as officers authorised by the British Gas Corporation in respect of dangers arising from the supply by BGC.
The amendments are drafted so as to put the rights of entry that may be conferred on officers authorised by the Secretary of State in respect of private gas supplies on the same footing as those that may be conferred on the BGC in respect of its supplies. In deference to the discussion that we had in Committee and to the point made by the right hon. Member for Leeds, South (Mr. Rees). I shall look more closely at what is proposed.
Under schedule 4(26) of the 1972 Act, officers of the corporation who enter premises under the regulations made under section 31 of the 1972 Act must ensure that the premises are not left less secure as a result of the entry. In addition, BGC is obliged to make good or pay compensation for any damage caused by the officer, or person accompanying him in entering the premises, in taking any action authorised by the regulations, or in making the premises secure.
As part of the policy that I have set out, subsection (4A) of amendment No. 9 extends those provisions to the rights of entry of officers appointed by the Secretary of State in relation to the safety of private supplies.
Under schedule 4(27) of the 1972 Act any person obstructing an officer of BGC in exercising the rights of entry is guilty of an offence punishable upon conviction by a fine. Subsection (4B) of amendment No. 9 ensures that in future obstructing either an officer of BGC or of the Secretary of State in exercising his rights of entry will be an offence punishable on conviction by a maximum fine of up to £200. That puts the two offences on an equal footing.
At present schedule 4(28) ensures that the regulations made under section 31 conferring powers of entry on officers of the corporation shall have effect subject to the provisions of the Rights of Entry (Gas and Electricity Boards) Act 1954. Subsection (4C) of amendment No. 9 extends that provision so that regulations conferring powers of entry on either officers of the corporation or of the Secretary of State shall be subject to the 1954 Act—the locus classicus, as it were—for each category of persons. That means that rights of entry are to be exercised only with the consent of the occupier of the premises or under the authority of a magistrate's warrant or in an emergency.
As we discussed emergency in Committee, it may be appropriate to dilate on that subject for a moment In an emergency no warrant would be required and the appropriate officer would be able to enter the premises immediately and take the action necessary to ensure safety under the new section 31 of the 1972 Act—that is to say, clause 14 of the Bill. Where there was not an immediate emergency and the occupier did not give his consent for the officer to enter, the officer could apply for a warrant to a justice of the peace or, in Scotland, to the sheriff. Provided that the justice of the peace was satisfied that entry was reasonably required for a specified purpose and that the officer was entitled under the safety legislation to right of entry, such a warrant could be issued. We believe that that procedure provides a sensible balance between the need to ensure safety in an emergency and the need to protect the rights of the individual.
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The second amendment follows from the first. It simply contains drafting changes that are consequential upon the first amendment. Subsections (4a), (4b) and (4c) of the first amendment extend provisions relating to rights of entry of officers of the corporation in respect of the safety of the British Gas Corporation's supplies to rights of entry of the Secretary of State in respect of private supplies. They are drafted in such a way as to consolidate the two sets of rights of entry, and the original parallel provisions in the Gas Act 1972 become superfluous. Therefore, amendment No. 16 deletes those parallel provisions.
The Government's intention was to put the rights of entry of those two categories of person on to the same footing. In my respectful submission, that gets over some of the problems. The interesting and worthwhile discussions in Committee made it clear that this was an appropriate way of doing it and I hope that these amendments—which, as I say, have been tabled in the light of those discussions—commend themselves to hon. Members.

Mr. Merlyn Rees: I am grateful to the Under-Secretary of State for what he has said. He is absolutely right. Most of the comments about the Committee were written by journalists who never attended it and who listened to one or two stories. That is the way of the world if it is after 10 pm. When one is there late, why stay any later? It is much easier to write a story without bothering. That is certainly the approach on Committees. However, it was a very sensible Committee in many ways, and particularly on this matter.
The Under-Secretary of State referred to two categories—the Gas Corporation's officers and the Secretary of State's officers. I must confess that I am not clear about this. It is always a problem when one is in Opposition and reading a Government clause. When we discussed the matter in Committee, I thought there was a third category. First, we postulated private gas spurring off the Gas Corporation's pipelines and sending gas to villages. We were told of villages in Leicestershire that would get gas. A few days later the poor old villages in Leicestershire had lost their gas. It had been a flight of fancy. I think that it was the Under-Secretary of State who told us that what he had been talking about was the provision of gas to industrial users.
However, when we were discussing that subject we came to the question of how safety would be dealth with. Do I not recall that as well as the two categories that we have been talking about there was a third category—that it would be possible for the firm supplying the gas to put out to contract the safety functions that would otherwise have been operated by the Gas Corporation? That is how I recall it. We now have only two categories.
I am genuinely seeking information. The Secretary of State's staff, centred in London, but regionalised as well, were, as I understood it, there for the purposes of inspection and regulation. I had not realised that there was a generalised safety function. This is where the third category that I have raised arises. However, the Under-Secretary has studied this and he says that there are two categories. Therefore, I must be wrong, but where do the private contractors come into the picture? I assume that the Secretary of State is right.
We discussed a similar amendment in Committee in a slightly different context. The Secretary of State told us

that this puts the staff on all fours with those of the Gas Corporation under previous legislation. The clause says that
the officer shall ensure that the premises are left not less secure by reason of the entry; and…shall make good, or pay compensation
and so on.
With regard to compensation, I know of only two cases of forced entry, although they may have been by consent. They were in difficult conditions and involved the Gas Corporation. If compensation had to be paid under those circumstances, one went to the Gas Corporation. The Gas Corporation has a procedure for dealing with it. I imagine that it happens on a wider scale.
Leicester has been mentioned. Let us suppose that somebody in Leeds, in my constituency, finds a man from the Ministry breaking down the door. With whom does he get into touch? People already know how to get in touch with the British Gas Corporation, as they do in Merthyr. As we all know, in Merthyr they go to the gas showroom. Everybody gathers there every night. It is the centre of the universe. But what will people have to do in Leeds to get compensation? What is the point of contact?
The clause states:
If any person wilfully obstructs any officer exercising powers conferred by regulations made under this section, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £200.
I presume that is the same sum of money as in the gas legislation.
If people are, for very good reasons, to break down doors in Leeds, I hope that they will display a medallion or something to enable them to be recognised by the public. When people come from the British Gas Corporation in coloured vans with flashing lights, in general the public know who they are.
I recognise that when there is a serious gas problem one cannot be very tardy. Usually the local police are contacted, and the local community constable or someone from the police station will be present. Members of the public will know who is breaking down the door or trying to get a key from the neighbours. Again, the questiom comes back to the nature of the men from the Ministry to whom the Under-Secretary refers. The people from the Gas Corporation know their way around the city. They have a particular section of the city to deal with and they know the local police station and are in touch with it.
Will the staff visualised in the clause operate on a regional basis? I gather that there will not be too many of them all together. Perhaps I misunderstood what the Under-Secretary said in Committee about emergency services. I should have made much more fuss if I had thought that private firms would be involved, but I gather that it is not the case, although I seem to remember private firms being discussed in Committee in this context.
These are powers about which the ordinary householder may get very upset. When his door has been broken down, he is bound to say that everyone in the area knew that the key was kept at his aunt's house next door. However, I see the virtue of what is proposed. I am glad to hear that there are two categories and not three, but I should still like to know where the third category arises and where it fits in.

Mr. Robert C. Brown: I welcome the fact that the Secretary of State, by tabling the two amendments, has at least given an indication that he listened to some of the speeches in Committee. The Secretary of State will recall


that we had a fairly extensive debate on the question of powers of entry, especially in relation to private contractors.
I do not want to go over the ground covered by my right hon. Friend the Member for Leeds, South (Mr. Rees), but it cannot be disputed that the British Gas Corporation employees and vehicles are fairly easily identifiable. I remember that the Newcastle and Gateshead Gas Company had its vehicles painted in my favourite colour—green. It was a shade between leaf green and pea green. The vehicles were easily identifiable. Unfortunately, with the advent of nationalisation the colour changed. That had nothing to do with the nationalistion; the management of Northern Gas decreed that the leaf green vehicles should be changed to, of all colours, blue and white. It was rather unfortunate that we had blue and white. I would not have minded so much if it had been red, white and blue.
Nevertheless, as my right hon. Friend the Member for Leeds, South said, the vehicles of the gas corporation are easily identifiable. However, I must correct my right hon. Friend because the vehicles do not have flashing lights.
I am still concerned about entry by private individuals. Nice people though they might be, none of the civil servants behind the Chair could be identifiable as people with the right of entry to disconnect a gas supply because of an emergency.
There are three categories of entry—entry by consent; entry by magistrate's warrant; and entry in a dire emergency which does not need a magistrate's warrant. I am concerned about emergencies where a private spur crosses private land. I remember my hon. Friend the Member for Rother Valley (Mr. Hardy) asking the Under-Secretary what will happen if the spur crosses the private land of somewone other than the consumer using gas from that spur. What will happen if, for safety or other reasons, someone needs to get at that pipe?
That brings me to the question of how an individual representing a private contractor is to act in an emergency. That individual will have to get an officer authorised by the Secretary of State. The private contractor might be operating miles from a centre of population. Is the Under-Secretary seriously suggesting that the private contractor with a dire emergency on his hands will have to find a telephone and ring the nearest office of the Department of Energy to ask one of the suitably authorised officers to make the necessary break-in for the contractor to disconnect the supply? The Under-Secretary is shaking his head and I hope that that is an indication that my fears are unfounded. It is a serious point, but I hope that he can convince me that I need not be concerned.
The increased number of burglaries and house breakings result in many old people being trapped in their homes. It is sad that Englishmen should be trapped in their castles, but that is the situation in many areas of the country under the Government's law and order policies.
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An old person may not be aware of the emergency which those outside his house know about. For example, my mother had no sense of smell, which was a great worry to us. Time and again I would smell gas even before I put my key in her front door. She may have put the kettle on and then thought of something else and walked away, leaving the gas turned on. Old people tend to do such things.
Many old people are trapped in their own homes and are frightened to open the front door. It will be terrifying for them to have the door broken down in front of them.

Mr. W. E. Garrett: I shall not detain the House for long, because the matters of concern have been adequately stated by my right hon. Friend the Member for Leeds, South (Mr. Rees) and my hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown).
However, I should like clarification of the reasons for the Government's approach in the clause and the amendments. It seems that we are to have two of everything. Why has it not been possible to weld the roles of the BGC officials and the private sector officials? Could they not form one body and have jointly negotiated wages and salaries?
It is important to get clarification, because I can envisage protest groups that are concerned about freedom of the individual making merry out of what may appear to be another bureaucratic nonsense. We must prevent that and get on with deciding what is best for the consumer.
It is also important to define the role of the officials. The Government are rightly attempting to define clearly their powers of entry, but there is still room for clarification.
At a time when 3 million people are unemployed I should be applauding the Government on their initiative in creating more jobs, but in this case we need to create not more jobs but a new method of dealing with this problem of duplication of powers. I think that it can be done, and that, if the Minister and his advisers wanted, they could get round this problem.

Mr. Mellor: This again has been a most helpful and useful debate and I fully accept the good sense behind the questions that have been posed. I shall do my best to answer them fully.
The present position is that there are two levels of safety coverage where an incident involving gas occurs. First is the coverage provided by the supplier of gas and second is the overall monitoring and investigation by the gas standards branch. The aim of this amendment is to try to extend the procedure to cover supplies of gas by private suppliers as well as gas supplied by th BGC. At the moment, BGC is involved in day-to-day matters concerning supply to premises, whether business or domestic. Normally, of course, that is with the consent of the customer; indeed, he is often the person who rings up and asks for help. So the kind of situation involved in the 1954 Act—entry by application to the courts or, in an emergency, by force—would not normally arise.
At the moment BGC does that from its own resources. The private suppliers will have to make arrangements so that the Secretary of State is satisfied that adequate safety arrangements exist. That relates to the discussion we had earlier of the reason for requiring the Secretary of State' s consent for all but the top two-thirds of the industrial and commercial gas market, which is exempted by reason of the 2 million therms limit.
One of the points the Secretary of State will check is whether the arrangements include a contractual right of entry for emergency personnel provided by the private supplier, so that potential dangers arising from private supplies are covered in a similar fashion to those arising from BGC supplies.
That led to the point the right hon. Member for Leeds, South (Mr. Rees) made in Committee which we clarified


in Committee; and it ties in with the very sensible point which the hon. Member for Wallsend (Mr. Garrett) was making about co-operation. I look forward, in all aspects of this, to the same kind of co-operation that exists between BGC and the private sector off-shore. Once we have all the debate out of the way, whatever the form in which this passes into law, and once people know what the law is, there is no reason why this co-operation between professional people of good sense should not continue.
One possibility is that the private supplier would be able to enter into a contractual relationship with BGC, where BGC might supply some of the emergency cover for a particular contract. The alternative would be that other, properly qualified people would do so.
That is the normal situation with day-to-day problems. Then we come to the particular point that can arise when there is need, because we are dealing with a dangerous substance, to have a right to enforce entry.

Mr. Merlyn Rees: I am very grateful to the Under-Secretary of State. Again he has said that they may contract it to the BGC or to a private contractor. What about the rights of the private contractor when it comes to breaking down the door?

Mr. Mellor: I am sorry if I did not make that clear earlier. He has no such rights and it would be quite wrong for him to have them. We have never contemplated that. The question at issue in Committee was whether the rights that we were giving to the officers of the Secretary of State, the gas standards branch, were properly on a par with the rights given to officers of the BGC. The decision was taken—rightly I think—that they were.
Private maintenance personnel will have rights under the contract and, when the situation is not an emergency, rights of entry can be enforced under the contract in the normal way. The Secretary of State will have to be satisfied that the same kind of maintenance and emergency services regime exists for a private sector supplier as for the BGC before he will give consent. That is why we had the second of the tripartite category of supply arrangements that we were talking about earlier.
When we come to the situation where someone has to be compelled to do something, we are on difficult and contentious ground. Some people believe that those who have the power should not have it. Although the 1954 Act has been around for about 30 years, it is not free from criticism. When there is consent there is no problem. The legislation permits entry with a warrant where there is no consent and, in an emergency, by such means as are appropriate. The right is presently exercised by BGC officers authorised by the Secretary of State, who have to carry appropriate documentation. Where necessary, they must show the warrant from the magistrates court.
It would not be right to give the extra authority that BGC officers have to people carrying out private sector emergency cover, even though they may be professionally competent. It would be wrong to give another citizen the right to force an entry to someone else's premises other than through the civil law. That is where the gas standards branch comes in.

Mr. Merlyn Rees: The private contractor cannot bust down the door. Does he ring the Department of Energy?

Mr. Mellor: I hope that I am not being legalistic and pedantic. We are dealing with contractual arrangements which two freely consenting parties can enter into and which are enforceable through the civil law, with rights that the criminal court—the magistrates court—can enforce and with a separate power to enter in an emergency, which one would have to justify afterwards. One cannot await the decision of a court in a sudden emergency.
If there is a breach of contract that cannot be dealt with in the normal way, it would be open to members of the gas standards branch, as officers of the Secretary of State, to apply to the magistrates for a warrant to enter the premises. In a true emergency, probably even the appropriate BGC officer would not be available. That is where the police come in.
I hope that the former Home Secretary will forgive me for dilating on police powers. He must have forgotten more than I know. The police have a duty to preserve life and property. They can enter premises irrespective of anything that the officers of the Secretary of State—whether BGC officers authorised under the Act or members of the gas standards branch—have the power to do. In a dire emergency there is the police. Normally, the police deal with the type of situations postulated.
The gas standards branch will not merely perform for the private sector a role to some extent performed by BGC officers who are empowered under the 1954 Act. The gas standards branch will retain an overview of regulations imposed on BGC and the private sector. It will continue its monitoring and investigation role for all gas supplies.
The day-to-day maintenance will be done by BGC for its own contracts and by a person acceptable to the Secretary of State for private sector contracts. That may be an officer of the BGC under contract or a member of some other organisation. Under the 1954 Act, BGC officers have the right of entry in relation to BGC supplies. Officers of the Secretary of State—that is, the gas standards branch in this case—will have those rights in relation to private sector supplies. The police will have rights in emergencies to supplement any other necessary rights, whether it be in relation to the BGC or to the private sector.
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On the third matter, overall, the gas standards branch has an overseeing view of anything that BGC does to monitor the gas supply and investigate. We have always known this. This is pursuant to the regulatory power the Secretary of State has always had.
In the case of gas supplied by other persons, the gas standards branch will have two roles—the monitoring and investigation role and acting in respect of fulfilling the right of entry that I have already mentioned.
I appreciate that in explaining matters which deal with the civil and criminal law and police powers, one is inevitably led into somewhat tortuous prose. I hope that I have set out to the satisfaction of the House a system that integrates into the existing framework of law the same system in respect of the private sector.

Mr. Robert C. Brown: I have been listening intently to the Under-Secretary of State in relation to the emergency situation that I referred to. With the best will in the world, I can still envisage a situation where the Minister's reply would not do anything to allay my fears. Assuming that the place is away in the wilds, even the


police will take some considerable time to arrive there to break into the premises. Someone in a semi-detached house in a village in Leicestershire might see outside a representative of the contractor who was looking extremely worried. If he said that there was a national emergency and there might be an explosion at any time but he had to wait for the police or somebody from the gas standards branch to arrive, how would the Under-Secretary of State, or indeed the Secretary of State, feel in such a situation?

Mr. Mellor: The hon. Gentleman is adding unnecessary complexity to this. He is postulating a situation involving a remote location. Whether it is BGC or non-BGC, any human agency will be in difficulty. We are not in the business of legislating against that.

Mr. Robert C. Brown: If the informant was an employee of BGC he could immediately take the necessary action and would not need to wait for the police.

Mr. Mellor: What the hon. Gentleman says is not necessarily the case. I have outlined the situation with as much clarity as I can muster and, I hope, in objective terms, reasonable clarity. It will be on the record. If the hon. Gentleman remains troubled, I will happily dilate on any matters in reply. I am conscious that there is to be another debate. My right hon. Friend has come back to participate in that. I know the House will want to hear him. I commend the amendment to the House.

Amendment agreed to.

Clause 15

CONSTRUCTION OF PIPE-LINES BY GAS CORPORATION

The Secretary of State for Energy (Mr. Nigel Lawson): I beg to move amendment No. 11, in page 19, line 40, leave out from beginning to 'likely' in line 41 and insert—
'(2A) The Secretary of State shall cause to be published in such publication or publications as he considers appropriate notice of the receipt by him of any notice under subsection (1) above; and a notice so published shall—

(a) specify the points between which the proposed pipe-line is to run;
(b) name a place or places where a copy of the notice under subsection (1) above (and of the map accompanying it) may be inspected free of charge, and copies thereof may be obtained at a reasonable charge, at all reasonable hours; and
(c) specify the time within which, and the manner in which, representations may be made as to the matters mentioned in paragraphs (a) and (b) of subsection (3) below. 
(3) Where in the light of any such representations duly made the Secretary of State is satisfied—

(a) that a demand exists or is'.
I do not think this will be a controversial amendment. Indeed, the essence of the amendment was proposed by hon. Members opposite during the Committee stage. At that time my hon. Friend the Member for Putney (Mr. Mellor) said that while the Government were content to accept the principle that the Secretary of State's power to direct the BGC to increase the capacity of a new high pressure pipeline should be contingent on the receipt of representations—this was the point we were debating—we would nevertheless be considering how best to give effect to this. Hence this amendment.

Mr. Merlyn Rees: I am grateful to the Secretary of State. This is another example of the discussions in

Committee producing much that is valuable. I return to one point that prevents me from showing off a word shat I found. I bet that the House did not know that the corporation's pipeline is a reticulated system. I would have used the word more often had I spoken for longer. The corporation's pipeline is a reticulated system and much stems from that. The point that has been put to me, however, is delay.
The notification procedure that we welcome will result in some delays. It has been put to me that as the Bill is drafted, the delays could last for up to two years. That is so long that the shorter period of six months during which the Secretary of State may advise the corporation of his intentions is assumed. Under the notification therefore, the choice of procedure, for the best way to achieve a given objective, must be made considerably earlier than is now the case. The extension of lead times means that the flexibility that is currently achieved through careful timing and phasing of alternatives will be lost. I should like a word, possibly not now, from the Department and the gas corporation about that matter. I am also interested to know about the extra staff for the Department of Energy, provision for which appears on the back of the Bill. Will this involve extra staff in the gas corporation as well?
Timing is important. There are other issues, but they would have arisen as the Bill was first drafted. The new procedure is desirable and the Opposition welcome it, but how does it fit into timing and the problems of the gas corporation as a major supplier in this complicated system? If the process takes a long time, matters in the reticulated system will have changed. But timing is the only point that I want to raise with the Secretary of State.

Mr. Lawson: The system is indeed complicated and reticulated. We must bear in mind that only a limited number of pipelines will be involved as we are here concerned only with main transmission pipelines and major distribution pipelines. I am concerned that there should be no undue delay. The question of delay arises much more seriously in the next amendment.
Amendment No. 11, while meeting some of the excellent points made by the Opposition in Committee, will still allow a thoroughly businesslike process by which the corporation's plans to build pipelines will become known and allow private suppliers of gas an opportunity to make representations about the capacity of a pipeline before any direction is given.
I see nothing in the amendment which would add to the staff requirements of my Department.

Amendment agreed to.

Clause 16

INCREASE OF CAPACITY ETC. OF PIPE-LINES BELONGING TO GAS CORPORATION

Mr. Merlyn Rees: I beg to move amendment No. 12 in page 21, line 32 at end insert—
'(3A) If the Corporation is of the opinion that the modifications specified in a direction given under this section could impair the safe operation of the pipe-line, it shall inform the Secretary of State and submit alternative proposals. In the absence of agreement on how the modifications are to be carried out, the matter shall be determined by arbitration.'.
I think that it is as well at the outset to explain the purpose of the amendment. We perhaps got into bad habits in Committee, wandering around the point before


returning to the actual purpose of the amendment—and very valuable that was. We thought carefully about this amendment. If the corporation believed that the modifications could impair the safe operation of the pipline, it would inform the Secretary of State in any event, but before dealing with alternative proposals and arbitration I ask the Secretary of State how this would work without the amendment.
In the past couple of days, a number of us have met people working in the industry who came here to protest. A very sensible group of people came to talk to us. They put too many points for my liking about problems of safety as a result of the changes. The arguments were not made with bravado or for the sake of making them, but the question of safety arose far too often for my liking. I leave that matter there.
How does the system work at the moment? The fear that it does not work properly is the reason for the amendment and the request for arbitration. In proceedings on the Petroleum and Submarine Pipe-lines Bill, the present Minister of State put forward an impassioned argument for arbitration on a similar issue. He said that it was
a vitally important point and something about which the industry not unreasonably feel very strongly".—[Official Report, Standing Committee D, 10 July 1975, c. 1504.]
We are now in Opposition and I use exactly the same argument.
It has been put to me that the integrated system of the Gas Corporation operates at pressures from 100 psi to 0·5psi. With regard to modifications to planned lines, the Secretary of State's directions are restricted to pipelines above 7 bars, but he can direct the location of junctions in any part of the pipeline. The powers of direction therefore have potentially far-reaching consequences. A decision affecting one part of a pipeline may have repercussions throughout the system. Gas may be supplied to premises by more than one route. In the event of pipeline failure it will still be possible to supply gas. Indeed, British Gas does rather well in guaranteeing supplies as it did last winter, particularly in the Northern regions and in Scotland where gas was re-routed by means of the reticulated system.
The extent to which the ability to guarantee supplies will continue depends upon the degree to which the Secretary of State or his staff choose to use the powers of direction over technical matters. My inquiries reveal that such powers are unknown elsewhere in the world. The Government talk as though common carrier provisions were well established overseas, but that is not so. There are a number of voluntary carrying agreements, but there are no cases in which there is a rigid carrying obligation and technical decisions are taken out of the hands of the pipeline owners.
Our request for arbitration arises out of the fact that decisions may be taken out of the hands of the pipeline users. Without our amendment, the situation could be extremely serious. If the Secretary of State wishes, he may direct the corporation to increase capacity or to locate junctions to his specifications. That means that he has the final say. Yet the Under-Secretary of State said that
Directions of the Secretary of State cannot take away responsibility from BGC…If the system leaks after the modifications have been carried out, it is clear that the sole responsibility must be with BGC."—[Official Report, Standing Committee E, 11 March 1982; c. 918.]

9.15 pm
That is extremely difficult to understand. The sole responsibility rests with BGC and yet it is the Secretary of State who takes the decision. The amendment seeks to allow the Gas Corporation to refer back to the Secretary of State any modification that it believes to be dangerous and to submit alternative proposals. In many cases it will not be a clear-cut issue. There will be a need for professional engineering judgments.
What are these modifications? The Secretary of State can direct an increase in the capacity of an existing pipeline. That means that a compressor will need to be built, which will require a highly complex decision. Judgments must be made on existing and future demand and on where that demand will come from. I understand that the balancing of the pipeline and compressor requires a great deal of effort. The Secretary of State could direct the building of a compressor that would have an adverse effect on the economics of transmission and on the provision of future gas supplies. If the third party requires the carriage of gas using BGC pipes which have no spare capacity, BGC will have to work out how to provide the additional capacity that will take into account present and future demand. There is no spare capacity in the system, so these powers of direction may be used more frequently than we expect.
In some instances the gas corporation will not be able to carry the gas direct to the customer's premises, and it will be necessary for the private supplier to use his own pipeline to take the gas from a suitable point on the gas grid system. Our anxiety relates to the location and type of junction that is used.
These technical difficulties were recognised in previous gas legislation, in that supplies direct from bulk transmission mains can be refused. I do not know what party was in power when that was done. Such a proposal would not have been in a party manifesto, but would have come from the Department itself. It is part of the main work of Government that is necessary whichever party is in power. One cannot alter the facts of life with a party manifesto.
There will be a change. A Gas Corporation customer could be refused a connection from such a line while an identical customer, or even the same customer, could receive a connection under a direction from the Secretary of State. Once that is done, it is the responsibility of the Gas Corporation, although the decision is taken by the Secretary of State.
In Committee, and previously, the Government stated that they did not doubt the British Gas Corporation's intentions. If so, surely the amendment is sensible. It gives to the organisation responsible for the carriage of gas the final say in the manner in which modifications are carried out. It does not hinder private sector access to the corporation's pipelines and ensures that it can be done in a manner that allows all present and future customers to take advantage of the integrated network.
There may be disagreements in technical matters of this nature. The amendment provides for arbitration. I accept that the method of arbitration would have to be considered in another place.
Many of my arguments apply to clauses 16 and 17. Clause 15 is concerned with planning the transmission and the most suitable network. Amendment No. 12 states:


If the Corporation is of the opinion that the modifications…could impair the safe operation of the pipe-line, it shall inform the Secretary of State"—
which I presume it does now—
and submit alternative proposals.
If the argument continues, it goes to technical arbitration.
At this time of night, and as we near the end of our consideration of the Bill at this stage, I shall not go on to dream about whether we shall win or lose the amendment. With the exception, perhaps, of those who produce or read technical journals, very few will ever know that we have discussed it. However, it is important that we do not cut corners on safety. These are highly technical matters involving, for example, reticulated gas systems—I rather fancy "reticulated" having discovered it today. We should put our minds to all these systems and joints about which I know precious little—I hope that I shall never have to put my mind to them again—if safety is involved.

Mr. J. Grimond: First, I compliment the right hon. Member for Leeds, South (Mr. Rees) on the extreme honesty of his approach. I pay tribute to his remarkable knowledge of reticulated systems and his sound determination to wipe all these matters out of his mind for ever as soon as tomorrow dawns.
On the face of the amendment, it seems reasonable that the British Gas Corporation should not be held responsible for carrying out modifications to which it may have objections. I had hoped that the right hon. Member for Leeds, South would tell us rather more about the form of arbitration. It seems that the arbitration might take a considerable time. When discussing a previous amendment the right hon. Gentleman appeared rather worried that delay would be caused. It seems that the proposed arbitration could lead to considerable delay. When the Minister replies, I hope that he will give us his views on how long the arbitration process will take, how it will be carried out and who will arbitrate.
I did not have the great pleasure of considering the Bill in Committee. Therefore, I do not know whether at that stage much light was thrown on the type of direction that the Minister might give. Until it is proved otherwise, we must presume that Ministers are sensible people, despite considerable evidence to the contrary. After 32 years in the House, I live in hope that things will improve. However, we must not presume that Ministers will give directions that will be clearly dangerous. I hope that the Minister will enlighten us on the consultation that he will have with the corporation—presumably it will be fairly elaborate—and I hope that he will reassure us on the expertise to which he has access and the method by which any directions will be carried out.

Mr. Robert C. Brown: I am sure that we would have all been delighted if the right hon. Member for Orkney and Shetland (Mr. Grimond) had been with us in Committee. It would have been a source of great pleasure. I am sure that the Secretary of State and the Minister would not have taken long to nominate the right hon. Gentleman as a substitute, if they had been asked, instead of one of the Members who in fact served in Committee.
The amendment seeks to rectify the clearly unsatisfactory situation that prevails in the modification of pipelines. I implore the Secretary of State to accept the amendment. If any part of the Bill is crying out for amendment, it is that which concerns the modification of pipelines.
As I have said, I am glad that the Government have seen fit to accept half the logic of the argument that I used in

Committee when I moved an amendment to raise unrestricted sales from 1 million therms to 3 million therms. The Secretary of State tabled amendment 8, which we have accepted tonight. However, the fact remains that between 25,000 and 2 million therms unrestricted use, subject, as far as I can see, to only minimum constraints, will be available. I am grateful for any small mercies that the Government are prepared to give us. We all know, having served those endless hours in Committee, that the small mercies have been small indeed. Nevertheless, I am happy to accept those small mercies rather than none—half a loaf is better than none.

Mr. Dalyell: While we are on the subject of loans, it might be appropriate, as the hon. Member for Croydon, Central (Mr. Moore) is also in the House, to voice the real concerns that were put to us during the Committee stage, especially on junctions, by the National Farmers Union. There is also the seeming discrepancy between the letter from the hon. Member for Croydon, Central on 25 March to Sir Richard Butler and that from the hon. Member for Putney (Mr. Mellor) on 29 March about public inquiries. Will my hon. Friend accept that I gave notice to the Government that I would raise the matter, not in the form of an amendment, but at an appropriate stage? Either on clause 15 or 16 is the appropriate moment to do so. I hope that these rather complex issues of public inquiries that bother the National Farmers Union can be sorted out, especially with regard to junctions.

Mr. Brown: I accept that. It is something of which we should not lose sight. We had a considerable debate in Committee and I am sure that my hon. Friend the Member for West Lothian (Mr. Dalyell) is right in saying that he asked for a commitment that we would be given some information on Report. I recall the fairly lengthy discussion that we had on the issue raised by the National Farmers Union and the concern that it expressed.
The hon. Member for Banff (Mr. Myles) is not here, but I recall that he and I had a lengthy discussion in Committee on the subject of field drains. We even got on to the subject of stone drains. I admit to being almost on terms of friendship with the hon. Member. I was almost afraid that I should have to spend half my summer recess on his farm picking taffies.
In Committee the Under-Secretary said that in practice the constraint would be one of safety. That being the case, why cannot the Government accept the amendment? At the moment, even where the British Gas Corporation, with its wealth of experience, tells the Secretary of State that any given modification is unsafe, he still has absolute discretion to override that advice simply because he thinks fit.
To add insult to injury, the British Gas Corporation will be responsible for the continued safety of the whole network. I am not suggesting that the Secretary of Stale will be brutally stupid or anything like that and simply disregard the advice of the British Gas Corporation, but there might be a conflict of advice and the Secretary of State can be out on a limb, having to make up his mind on the advice offered to him. Ministers have to do that every day, because civil servants tend to offer a series of options. It does not make the life of the Minister any easier when, at the end of the day, he has to ponder the options.
The normal option that a Minister must ponder does not involve public safety to such an extent. The BGC operates,


in the national interest, a network of about 250,000 miles of pipes, all within narrow pressure ranges. The whole system is fine-tuned and should not go wrong. When the network went wrong we had the King report, which resulted in a mains renewal programme. However, before that happened there was a series of explosions.
It is not my job as the Member for Newcastle, West to put fear into either my constituents or the constituents of any other right hon. or hon. Member, but we should bear in mind exactly what happened before that major mains renewal programme was carried out. There was a series of extremely nasty explosions.

Mr.Dalyell: Does my hon. Friend also recollect that in Committee I produced much evidence from such constituents as Mr. Bob Struthers and Mr. Chris Gorman along exactly the same lines? The events are not confined to the Newcastle area, but are in the minds of trade union officials in Scotland.

Mr. Brown: I am grateful to my hon. Friend. I hope that I did not create the impression that the problems were confined to the Newcastle area. They are nation-wide.
The Secretary of State need not give reasons why he directs a modification. Although he is duty bound to consult the BGC, he is not duty bound to listen to it. If he has already been nobbled by civil servants—he may be very busy with Cabinet meetings—he may not be too intent on listening to the BGC. It reminds me of the old chestnut about consultation being:
I am going to tell you what to do and what I am going to do—when you have had your say I am going to tell you how I have done it.
If that is the proposed consultation, I hate to think of what we shall have in the future.
Public interest will not be best served if the British Gas Corporation is overruled. It has some of the best safety standards in the world, with some of the most experienced gas engineers. If it says that any given modification is unsafe, for my money it is definitely unsafe. Although the Secretary of State will receive representations on modifications from equally experienced engineers, their experience is in oil technology, which is very different from gas. The chances of confusion or accident with such a finely-tuned mechanism as the transmission system will become infinitely greater.
In Committee the Under-Secretary of State said—I regret to say with absolute seriousness—that, if the BGC was unhappy with the safety provisions arising from modifications, it could go to court. Their Lordships do not understand basic economics, let alone the finer points of gas safety. I would be happy to leave public safety on the streets to Lord Scarman, but heaven help us if he must adjudicate on public safety under the streets. I doubt whether he or his colleagues would wish that burden to be put on their shoulders.
The Under-Secretary of State gave the game away in Committee when he said:
To leave the details of the Government's modifications entirely in the hands of the corporation would, I fear, be tantamount to asking the private supplier to sign a blank cheque."—[Official Report, Standing Committee E; 11 March 1982, c. 918.]

That is not what we mean by creating conditions of real competition in the market place. In other words, commerce, not safety, will decide and dictate modifications to British gas pipelines.
While arbitration is not the most satisfactory method to be adopted in any event, it is, as the right hon. Member for Orkney and Shetland indicated the least damaging option. Therefore, I sincerely hope that the Secretary of State will be a little more generous and accept the amendment.

Mr. Douglas: The Opposition have tabled an interesting amendment. I am glad that the hon. Member for Bedford (Mr. Skeet) is now in his place. The Secretary of State knows that he has pressed the Government to write into the Bill a definition of gas that we did not have before. The hon. Gentleman is to be congratulated by every hon. Member.
Unfortunately, in a way this involves a comprehensive view of what should be included—not only natural gas or methane, but propane, butane, ethane and so on, and this could be an area of possible and probable dispute between the Secretary of State and the BGC. The clause states:
the Secretary of State may, after giving the Corporation an opportunity of being heard about the matter, give directions to the Corporation in accordance with subsection (2) below, in consequence of the application.
With his industrial wisdom, the Secretary of State knows that it is bad for civil servants or anyone else to second-guess, especially when there are people in the field engaged in the day-to-day operation. As a principle, that is a difficult and bad thing to do. Nevertheless, under this clause, the Secretary of State takes unto himself the responsibility of adjudicating what shall be in the best interests of the system as a whole. He takes unto himself the responsibility of determining major and difficult matters of public safety.
It is one thing to take on such responsibilities if one is running a system that will be totally related to United Kingdom requirements. Even that is difficult to embrace. However, in his oft-quoted speech at the Institute of Petroleum dinner, the right hon. Gentleman gave great credence to the fact that he would be favourably disposed to the export of gas. That is quite another matter. In that event, he will be concerned not only with the commercial good of the United Kingdom but with judgments of what is good in terms of the North Sea operators getting a higher price for the gas should it be exported.
Even in the best of all possible worlds, there is bound to be pressure on both individuals giving advice to the Secretary of State and on the companies. We all know that lobbying is part of the parliamentary system. People can exert pressure and write to Members of Parliament or to the Secretary of State stating that we should open up the system because such-and-such an application would be beneficial to their constituency and attract jobs. That is perfectly legitimate. I therefore hope that the right hon. Gentleman will not argue that he will not be subjected to such pressures or that somehow or other he will remain completely above them. It would be almost impossible for anyone to be in that position.
Therefore, if there were a legitimate difference of opinion between the Secretary of State—that is, his advisers—and the corporation on modifications specified in directions on safety, there would be a real need, in the public interest, to have it ventilated. I am sure that the Secretary of State would listen to the corporation's view.
However, he could not say, having listened to its view, that it was his judgment against the corporation's. No Secretary of State would want just that. Somehow or other, that fact would get out and he would have to defend his position. It is much better to have this type of highly technical matter ventilated and determined, where possible, by arbitration.
I am obviously in some difficulty on this aspect because it is a question of who will second-guess both the Secretary of State and the corporation. That is a difficult decision. The appointment of an arbitrator or, in Scottish terms, an adviser, could be mutually agreed. I hope that the Secretary of State will deploy his mind on that issue. I am sure he appreciates that the whole House wants to be sure on this matter.
There may be a conflict of opinion on opening the systems in terms of junctions and many modifications. The Secretary of State should not shut his mind to calling in opinions from outwith his Department and the corporation to settle such issues. That would be judicious and no Secretary of State, desirous of making it abundantly clear that public safety and not commercial gain was the main interest, could possibly resist this amendment.

Mr. Michael Morris: I listened with care to the representations from the Opposition Benches. I find it difficult to believe that any safety dimension should be considered by arbitration. If the Secretary of State feels that the large number of modifications referred to by the hon. Member for Dunfermline (Mr. Douglas) is a smokescreen for preventing expansion, he should expose them as such. However, if there were genuine safety dimensions because of some particular—I cannot imagine there would be more than one or two at the most—modification, my right hon. Friend the Secretary of State would take advice. On taking that advice, he would respond to it.
We would show gross dereliction of our duty in the House if we suggested that the whole issue should be shrugged off on to some arbitrator. In any case, he might get it wrong. The Secretary of State or his successor and the British Gas Corporation between them ought to be able to resolve the safety requirements. No Secretary of State, regardless of which party is in Government, will in the end go against the safety requirements.

Dr. J. Dickson Mabon: I am astonished at what has happened tonight. The hon. Member for Dunfermline (Mr. Douglas) argued the case ambitiously for more than can be achieved. The Secretary of State does not want this amendment or change. He wants to stick to what he has got so far. In retrospect, perhaps a year from now, the Tories will substantially regret what they have done or are going to do tonight. They are doing something that is difficult to understand.
The Tories are trying to evaluate a situation that does not exist. The Minister wants to privatise. That is what he is there for and that is why he has been sent to the Department. In the long run, he might be wrong. We are trying to argue with him. We should like him to come back to the House of Commons and say that we should discuss both this and other parts of the Bill. He will not discuss them. He knows—

Mr. Dalyell: Please sit down.

Dr. Mahon: I am not aware that the guillotine descends at 10 o'clock. [HON. MEMBERS: "It does. "] I must have made a mistake.
The Minister is wrong and will regret his decision. I ask him to reconsider his decision, and to agree with the amendment.

Mr. Lawson: I agree that we suffered a sad loss due to the absence of the right hon. Member for Orkney and Shetland (Mr. Grimond) from Committee. However, I regret that I cannot agree with the amendment.
Let us remind ourselves of the purpose of the exercise. We are seeking to bring competition in the supply of gas that can be achieved only if there is effective private access to the British Gas Corporation's pipeline network so that there is a common carrier. At the same time, we have to maintain safety standards.
I fully appreciate and accept the concern that Opposition Members voiced about safety, but the Bill correctly strikes a balance. In the debate on the previous amendment, the right hon. Member for Leeds, South (Mr. Rees) spoke about problems of delay. If amendment No. 12 were carried, that would be a recipe for delay and procrastination.
There ar two concepts in the amendment—that, if it wishes, the BGC should come forward with alternative proposals for safety and that there sould be arbitration on disagreements. Those are already in the Bill as drafted, but the amendment seeks to submerge the common carrier under a welter of superfluous bureaucracy. Our intention is to operate—[Interruption.] We are concerned about safety. If the hon. Member for Merthyr Tydfil (Mr. Rowland) is not concerned about safety, he should not pretend that he is.
We intend to operate the common carrier provision in the clause in a businesslike and expeditious way. Of course, it is right that the BGC should be given the opportunity to state its side of the story, whether on safety or any other matters. However, that opportunity is already guaranteed through clause 16(1). Once that has been done, the way is clear for me as Secretary of State to consider the evidence and to decide whether I propose to give a direction. It is in the interests of everyone that matters should not drag on or be dogged by uncertainty, but should be resolved definitely.

Mr. Robert C. Brown: Does the Secretary of State agree that it is manifestly unfair that, when his direction is directly against all the engineering expertise of BGC, he says that BGC is still responsible for safety?

Mr. Lawson: I do not think it is.
Perhaps I should develop my account of the procedure as it is in the Bill. That might go some way towards satisfying the hon. Gentleman, although I doubt whether it will satisfy him totally.
Under the amendment that we are now debating, the private supplier would be put in a totally impossible position. He might apply for a direction under clause 16 and, after the corporation had been heard, I might then issue a direction. However, the private supplier would still not know whether he could rely on that direction. The gas corporation might submit alternative proposals even at that late stage. The amendment proposes no time limit on the corporation coming forward with alternative proposals—it could be months, or indeed years, later.
guru


How is a private supplier to undertake what may be a considerable investment in his project with this open-ended uncertainty hanging over him? The private supplier is not mentioned at all in the amendment. He will not even be informed if the corporation submits alternative proposals. Nothing in the amendment gives him any role whatever in an arbitration.

Mr. Dalyell: I do not ask for an answer now, but can we have an assurance that the Government will consider the complex matter that has arisen relating to the farmers and the public inquiry and the letters of the two Under-Secretaries? Can that be looked at and a possible Lords amendment introduced?

Mr. Lawson: The worries of the National Farmers Union on this matter are unfounded. In the letter of the Under-Secretary of State, my hon. Friend the Member for Croydon, Central (Mr. Moore), to the president of the National Fanners Union, he wrote:
I hope that I have fully answered the main concerns expressed in the memorandum, but if there are still points of difficulty, please let me know. I shall be happy to discuss them further if you feel that would help.
No response has been received, but that offer remains open.
The potential for delay, the issue that we are discussing in this amendment, has been borne out by discussions that we have had with oil companies about the operation of the common carrier system. As potential private suppliers, the companies want certainty and procedures that are not so lengthy and open-ended as to make commercial arrangements wholly impractical. That is what I fear would be the result of the proposed amendment.
I am not sure whether the Opposition have discussed this amendment with any of the companies which are potential private suppliers. I rather doubt that they have done so. If they had, they would know that the amendment would render clause 16 useless from a private supplier's point of view. That could be their intention—I do not know. The Government are bound to reject it.
As for the gas corporation coming forward with alternative proposals where it is concerned about safety, the corporation already has an opportunity to do so in the Bill as drafted. Indeed, it will have two such opportunities, I made it clear on Second Reading. I said:
In the first instance it will be up to other suppliers to negotiate with the corporation the terms on which it is prepared to transmit their gas through its grid."—[Official Report, 19 January 1982; Vol. 16, c. 173.]
In Committee, my hon. Friend the Under-Secretary of State mentioned that it would be open to me, as Secretary of State, to reject an application under clause 17(1)(a) where I was not satisfied that the applicant had made sufficient attempt to achieve his objective through commercial negotiations with the corporations. He explained that the filter would probably also affect applications under clause 16 because it is unlikely that an applicant would pursue a question of increased capacity or the installation of junctions, the cost of which he would have to defray in normal circumstances, unless he was confident that he would have the opportunity to make use of the pipeline once the modifications under clause 16 had been executed.
When a private supplier approaches the gas corporation to negotiate in this way, and the corporation sees some

safety difficulty—this is what Labour Members were particularly concerned about—there would be nothing at all to prevent the corporation from suggesting alternative modifications. That is the first opportunity.
The second opportunity comes if the corporation and the private supplier disagree. The private supplier then applies to me for a direction under clause 16. Clause 16(1) provides that, before giving any directions, I have to give the corporation an opportunity to be heard. Here again, if the corporation sees any safety problem, it will be able to draw it to my attention. It should do so; I am sure it would do so, and would propose alternative solutions. Therefore, there is no need to provide yet a third opportunity, as the amendment would do.
The concept of arbitration—the other part of the amendment—is also a duplication, because the whole purpose of clause 16 is to permit access to me as Secretary of State so that I can arbitrate on differences between the corporation and private suppliers which it has not been possible to resolve through negotiation. The only effect of laying one arbitration on top of another, as the amendment proposes, would be pointless delay and burgeoning bureaucracy.
It is possible to conceive of a totally different system in which the regulatory responsibility rests not with the Secretary of State and the Department but with an independent regulatory agency. I made it clear on Second Reading that as we gain experience it may well be sensible to move the regulatory responsibilities from the Department to an independent agency, but at this stage it would be foolish to set up some brand new agency. To get off the ground it would be much more sensible to have the regulatory functions carried out by the Department and by the Secretary of State.

Mr. Dalyell: Just who in the Department actually does the arbitrating?

Mr. Lawson: The Department is recruiting extra staff. That was made clear on Second Reading when the hon. Member mentioned the matter.
It is implicit in the suggestions of Labour Members that I or any other Secretary of State would be likely to make directions which flew in the face of safety considerations and that there should be some further safeguard or some outside arbitrator, although the amendment does not say precisely who that arbitrator would be, as the right hon. Member for Orkney and Shetland said. There is no need for such a safeguard because the clause already provides the opportunity for everybody to be heard. It is inconceivable that any Secretary of State would make directions which flew in the face of safety.
I remind the right hon. Member for Leeds, South (Mr. Rees) and his hon. Friends that ever since the Gas Act 1972, which he and his hon. Friends fully support, it has been specifically the responsibility of the Secretary of State to make safety regulations under section 31 of that Act—regulations that we are strengthening, incidentally, in clause 14.
Very shortly we shall be moving on to part IV of the Bill, dealing with offshore safety—another very important area of safety—where again the responsibility lies with the Secretary of State. This has all been agreed on both sides of the Committee and I am sure that it will be agreed on both sides of the House today.
I do not believe that there is any reason on safety grounds for accepting the amendment. In practice, the


amendment would make the common carrier provisions of the Bill a dead letter. I ask the House to reject the amendment.

Mr. Merlyn Rees:: The Secretary of State referred to legislation from the early part of the last decade. The whole point is that we now have a common carrier provision. That is the change.
The Secretary of State also said that perhaps in the long run there would be an independent agency. In that respect, minds on each side of the Chamber are thinking in the same direction. I would not contend that the amendment as drafted is the correct way to deal with the question, but it appears that the Secretary of State is thinking about the same problem as we are.
We were prompted to table the amendment because it was said in Committee that the Secretary of State would direct the gas corporation to act in a certain fashion. The Under-Secretary said that from that moment on the responsibility was that of the gas corporation. In a court of law, whose responsibility would it be if the gas corporation's representative, following an accident, an explosion or whatever, said that modifications had been carried out not as the Corporation had wanted, but as the Secretary of State had desired. In my view, in law the responsibility would rest with the Secretary of State. We were directing our minds to that aspect when we tabled the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 213, Noes 282.

Division No. 115]
[10.00


AYES


Abse, Leo
Dalyell,Tam


Allaun,Frank
Davidson,Arthur


Alton,David
Davies, Rt Hon Denzil (L 'lli)


Anderson,Donald
Davies, Ifor (Gower)


Archer, Rt HonPeter
Davis, Clinton (HackneyC)


Ashley, Rt HonJack
Davis, Terry (B'ham, Stechf'd)


Ashton,Joe
Deakins,Eric


Atkinson,N.(H'gey,)
Dean, Joseph (Leeds West)


Bagier,Gordon A.T.
Dixon,Donald


Barnett, Rt Hon Joel (H'wd)
Dobson,Frank


Beith, A.J.
Dormandjack


Benn, Rt HonTony
Douglas,Dick


Bennett,Andrew(St'kp'tN)
Douglas-Mann,Bruce


Bidwell,Sydney
Dubs,Alfred


Booth,Rt HonAlbert
Duffy, A. E. P.


Boothroyd, MissBetty
Dunn, James A.


Bottomley,RtHonA.(M'b ro)
Dunwoody, Hon Mrs G.


Bray, Dr Jeremy
Eadie,Alex


Brown, Hugh D. (Provan)
Eastham, Ken


Brown, R. C. (N'castle W)
Edwards, R. (W'hampt'n S E)


Brown, Ronald W. (H'ckn'yS)
Ellis, R. (NED'bysh're)


Brown,Ron(E'burgh,Leith)
Ellis, Tom (Wrexham)


Buchan,Norman
English,Michael


Callaghan, Jim (Midd't'n&amp; P)
Evans, Ioan (Aberdare)


Campbell,Ian
Evans, John (Newton)


Canavan,Dennis
Field,Frank


Cant, R. B.
Fletcher,Ted (Darlington)


Carmichael,Neil
Ford, Ben


Cartwright,John
Forrester,John


Clark, DrDavid (S Shields)
Foster, Derek


Cocks, Rt Hon M. (B'stol S)
Foulkes,George


Coleman,Donald
Fraser, J. (Lamb'th, N'w'd)


Concannon, Rt Hon J. D.
Garrett, Joh n (Norwich S)


Cook, Robin F.
Garrett, W. E. (Wallsend)


Cowans,Harry
George,Bruce


Cox, T. (W'dsw'th, Toot'g)
Golding,John


Craigen, J. M. (G'gow, M'hill)
Graham,Ted


Crowther,Stan
Grant,George(Morpeth)


Cryer, Bob
Grant,John (IslingtonC)


Cunliffe,Lawrence
Grimond, RtHonJ.


Cunningham, DrJ. (W'h 'n)
Hamilton,James(Bothwell)





Hamilton, W. W. (C'tralFife)
Penhaligon,David


Hart, Rt Hon Dame Judith
Powell Raymond(Ogmore)


Hattersley, Rt Hon Roy
Prescott,John


Heffer, Eric S.
Race, Reg


Hogg, N. (EDunb't'nshire)
Radice,Giles


Holland,S.(L'b'th,Vauxh'll)
Rees, Rt Hon M (Leeds S)


HomeRobertson,John
Richardson,Jo


Homewood,William
Roberts,Albert(Normanton)


Hooley,Frank
Roberts,Allan(Bootle)


Horam,John
Roberts,Gwilym (Cannock)


Howell, Rt Hon D.
Robertson,George


Howells,Geraint
Robinson, G. (CoventryNW)


Hoyle,Douglas
Robinson, P. (Belfast E)


Huckfield,Les
Rooker, J. W.


Hughes, Mark(Durham)
Roper,John


Hughes, Robert (AberdeenN)
Rowlands,Ted


Janner, Hon Greville
Ryman,John


Jay, Rt Hon Douglas
Sandelson,Neville


Johnson, Walter (Derby S)
Sever,John


Jones, Rt Hon Alec (Rh'dda)
Sheerman,Barry


Jones, Barry (East Flint)
Sheldon, Rt Hon R.


Kaufman, Rt Hon Gerald
Shore, Rt Hon Peter


Kilroy-Silk,Robert
Short, Mrs Renée


Lambie,David
Silkin, Rt Hon J.(Depfford)


Lamborn,Harry
Silkin, Rt Hon S. C. (Dulwich)


Lamond,James
Silverman,Julius


Leadbitter,Ted
Skinner,Dennis


Leighton,Ronald
Smith, Rt Hon J. (N Lanark)


Lestor, MissJoan
Soley,Clive


Lewis, Arthur (N'ham NW)
Spearing,Nigel


Lewis, Ron (Carlisle)
Spriggs,Leslie


Lofthouse,Geoffrey
Stallard,A.W.


Lyon,Alexander(York)
Steel, Rt Hon David


Lyons, Edward (Bradf'dW)
Stewart, Rt Hon D. (W lsles)


Mabon, Rt Hon Dr J. Dickson
Stoddart,David


McCartney,Hugh
Stott,Roger


McDonald,DrOonagh
Strang,Gavin


McElhone,Frank
Strawjack


MacKenzie, Rt Hon Gregor
Summerskill,HonDrShirley


Maclennan,Robert
Thomas, DrR.  (Carmarthen)


McNally,Thomas
Thorne, Stan (PrestonSouth)


McNamara,Kevin
Tilley,John


McTaggart,Robert
Tinn,James


Marks,Kenneth
Torney,Tom


Marshall, D(G'gowS'ton)
Varley, Rt Hon Eric G.


Marshall,DrEdmund (Goole)
Wainwright,E.(DearneV)


Marshall, Jim (LeicesterS)
Wainwright,R.(ColneV)


Martin,M(G'gowS'burn)
Walker, Rt Hon H.(D'caster)


Mason, Rt Hon Roy
Welsh,Michael


Maxton,John
White, FrankR.


Maynard,MissJoan
White,J.(G'gow Pollock)


Meacher,Michael
Whitehead,Phillip


Millan,Rt Hon Bruce
Whitlock,William


Miller, Dr M. S. (EKilbride)
Wigley,Dafydd


Mitchell,Austin(Grimsby)
Willey,Rt Hon Frederick


Mitchell, R. C. (Soton Itchen)
Williams, Rt Hon A.  (S'sea W)


Morris, Rt Hon A. (W'shawe)
Wilson,Gordon (DundeeE)


Morris, Rt Hon C. (O'shaw)
Wilson,William (C'trySE)


Morris, Rt Hon J. (Aberavon)
Winnick,David


Morton,George
Woodall,Alec


Moyle, Rt Hon Roland
Woolmer,Kenneth


Newens,Stanley
Wrigglesworth,Ian


O'Halloran,Michael
Wright,Sheila


O'Neill,Martin



Park,George
Tellers for the Ayes:


Parker,John
Mr. Frank Haynes and Mr. Allen McKay.


Parry,Robert



Pendry,Tom





NOES


Adley,Robert
Baker, Nicholas (NDorset)


Aitken,Jonathan
Banks,Robert


Alexander,Richard
Beaumont-Dark,Anthony


Alison,Rt Hon Michael
Bendall,Vivian


Amery, Rt Hon Julian
Benyon,W. (Buckingham)


Ancram,Michael
Best,Keith


Arnold,Tom
Bevan,David Gilroy


Aspinwall,Jack
Biffen, Rt Hon John


Atkins, Rt Hon H.  (S'thorne)
Biggs-Davison,SirJohn


Atkins,Robert(PrestonN)
Blackburn,John






Blaker,Peter
Gray,Hamish


Body,Richard
G riffiths, E. (B 'ySt. Edm 'ds)


Bonsor,SirNicholas
Griffiths, Peter Portsm'thN)


Boscawen,HonRobert
Grist,Ian


Bottomley, Peter (W'wich W)
Grylls,Michael


Bowden,Andrew
GummerJohnSelwyn


Braine,SirBernard
Hamilton,HonA.


Bright,Graham
Hamilton,Michael(Salisbury)


Brittan, Rt.Hon.Leon
Hampson,DrKeith


Brooke, Hon Peter
Hannam,John


Brotherton,Michael
Haselhurst,Alan


Brown,Michael(Brigg&amp; Sc'n)
Havers, Rt Hon Sir Michael


Browne,John (Winchester)
Hawkins,Paul


Bruce-Gardyne,John
Hawksley,Warren


Bryan,SirPaul
Hayhoe, Barney


Buck,Antony
Heddle,John


Budgen,Nick
Henderson,Barry


Bulmer,Esmond
Heseltine,Rt Hon Michael


Burden,SirFrederick
Hicks,Robert


Butcher,John
Higgins, Rt Hon Terence L.


Butler, HonAdam
Hogg,HonDouglas(Gr'th'm)


Cadbury,Jocelyn
Holland,Philip(Carklton,)


Carlisle,John (LutonWest)
Hooson,Tom


Carlisle,Kenneth (Lincoln)
Hordern,Peter


Carlisle, Rt Hon M. (R'c'n)
Howe, Rt Hon Sir Geoffrey


Chalker, Mrs.Lynda
Howell,RtHonD.(G'ldf'd)


Channon, Rt. Hon. Paul
Howell, Ralph (NNorfolk)


Chapman,Sydney
Hunt,David (Wirral)


Churchill,W.S.
Hunt, John (Ravensbourne)


Clark, Hon A. (Plym'th, S'n)
Hurd,Rt Hon Douglas


Clark, SirW. (Croydon S)
Irving, Charles (Cheltenham)


Clarke,Kenneth (Rushcliffe)
Jessel,Toby


Cockeram,Eric
JohnsonSmith,Geoffrey


Colvin,Michael
Jopling,Rt Hon Michael


Cope,John
Joseph,Rt Hon Sir Keith


Corrie,John
Kaberry,SirDonald


Costain,SirAlbert
Kershaw,SirAnthony


Cranborne,Viscount
Kitson,SirTimothy


Critchley,julian
Lamont,Norman


Dean, Paul (NorthSomerset)
Lang, Ian


Dickens,Geoffrey
Latham,Michael


Dorrell,Stephen
Lawrence,Ivan


Douglas-Hamilton,LordJ.
Lawson, Rt Hon Nigel


Dover,Denshore
Lee,John


du Cann, Rt Hon Edward
LeMarchanLSpencer


Dunn,Robert (Dartford)
Lennox-Boyd,HonMark


Durant,Tony
Lester, Jim (Beeston)


Dykes,Hugh
Lewis, Kenneth (Rutland)


Eden, Rt Hon Sir John
Lloyd, Ian (HavantA W'loo)


Edwards, Rt Hon N. (P'broke)
Lloyd, Peter (Fareham)


Eggar,Tim
Loveridge,John


Elliott,SirWilliam
Luce,Richard


Emery, SirPeter
Lyell,Nicholas


Eyre,Reginald
Macfarlane,Neil


Fairbairn,Nicholas
MacGregorJohn


Fairgrieve,SirRussell
MacKay, John (Argyll)


Faith,MrsSheila
Macmillan, Rt HonM.


Farr,John
McNair-Wilson, M. (N'bury)


Fell,SirAnthony
McNair-Wilson, P. (NewF'st)


Finsberg,Geoffrey
McQuarrie,Albert


Fisher,SirNigel
Marland,Paul


Fletcher,A. (Ed'nb'ghN)
Marshall,Michael (Arundel)


Fletcher-Cooke,SirCharles
Marten,Rt Hon Neil


Fookes, Miss Janet
Mates,Michael


Forman,Nigel
Maude, Rt Hon Sir Angus


Fowler, Rt Hon Norman
Mawby, Ray


Fox,Marcus
Mawhinney,DrBrian


Fraser, Peter (SouthAngus)
Maxwell-Hyslop,Robin


Fry, Peter
Mayhew,Patrick


Gardiner,George(Reigate)
Mellor,David


Gardner, Edward (SFylde)
Meyer,SirAnthony


Garel-Jones,Tristan
Miller,Hal (B'grove)


Gilmour, Rt Hon Sir Ian
Mills,Iain (Meriden)


Glyn, DrAlan
Mills, Peter (WestDevon)


Goodhart,SirPhilip
Miscampbell,Norman


Goodhew,SirVictor
Moate,Roger


Goodlad,Alastair
Monro,SirHector


Gorst,John
Montgomery, Fergus


Gow, Ian
Moore,John


Grant, Anthony (HarrowC)
Morris, M. (N'hamptonS)





Morrison, Hon C. (Devizes)
Spicer, Michael (S Worcs)


Morrison, Hon P. (Chester)
Sproat,Iain


Mudd,David
Squire,Robin


Murphy,Christopher
Stainton,Keith


Myles, David
Stanbrook,lvor


Neale,Gerrard
Stanley,John


Neubert,Michael
Steen,Anthony


Newton,Tony
Stevens,Martin


Normanton,Tom
Stewart,A. (ERenfrewshire)


Nott,Rt Hon John
Stewart, Ian (Hitchin)


Onslow,Cranley
Stokes John


Oppenheim, Rt Hon Mrs S.
StradlingThomas,J.


Osbornjohn
Tapsell,Peter


Page, John (Harrow, West)
Taylor, Teddy (S'end E)


Page, Richard (SWHerts)
Tebbit, Rt Hon Norman


Parris,Matthew
Temple-Morris,Peter


Patten,Christopher(Bath)
Thatcher, Rt Hon Mrs M.


Patten,Johnf(Oxford)
Thomas, Rt Hon Peter


Pattie,Geoffrey
Thompson,Donald


Pawsey, James
Thorne,Neil(IlfordSoufh)


Percival,Sir Ian
Thornton,Malcolm


Peyton, Rt Hon John
Townend,John(Bridlington)


Pollock,Alexander
Townsend, CyrilD, (B'heath)


Porter,Barry
Trippier,David


Prentice, Rt Hon Reg
Trotter,Neville


Proctor, K. Harvey
van Straubenzee,SirW.


Pym, Rt Hon Francis
Vaughan,DrGerard


Raison, Rt Hon Timothy
Viggers,Peter


Rathbone,Tim
Waddington,David


Rees-Davies, W. R.
Wakeham,John


Renton,Tim
Waldegrave,HonWilliam


Rhodes James, Robert
Walker, B. (Perth)


RhysWilliams,SirBrandon
Walker-Smith, Rt Hon Sir D.


Ridley,HonNicholas
Wall,SirPatrick


Rippon,RtHonGeoffrey
Waller, Gary


Roberts, M. (CardiffNW)
Walters,Dennis


Roberts, Wyn (Conway)
Ward,John


Rossi,Hugh
Warren,Kenneth


Rost, Peter
Wells,Bowen


Sainsbury,HonTimothy
Wells,John(Maidstone)


St. John-Stevas, Rt Hon N.
Wheeler,John


Shaw, Giles (Pudsey)
Whitelaw,Rt Hon William


Shaw,Michael(Scarborough)
Whitney,Raymond


Shelton,William(Streatham)
Wickenden,Keith


Shepherd,Colin(Hereford)
Wiggin,Jerry


Shepherd,Richard
Wilkinson,John


Silvester,Fred
Winterton,Nicholas


Sims,Roger
Wolfson,Mark


Skeet, T. H. H.
Younger, Rt Hon George


Speed,Keith



Speller,Jony
Tellers for the Noes:


Spence,John
Mr. Anthony Berry and Mr. Carol Mather.


Spicer, Jim (WestDorset)

Question accordingly negatived.

Mr. Douglas: I seek your guidance, Mr. Speaker. It would perhaps be for the convenience of the House if I were not to move my amendment No. 13 to clause 20, so that we can have a tidier debate and perhaps, with your permission, refer to it in the debate on the following amendment.

Mr. Speaker: I think that that meets the wishes of the House and, if it will help the House, so be it.

Clause 23

EXTENDED MEANING OF "OFFSHORE INSTALLATION"

Mr. Merlyn Rees: I beg to move amendment No. 14, in page 28, line 5, at end insert—
(1) No person, company or organisation may operate in controlled waters unless they have agreed to the following terms and conditions; that they shall—

(a) report each use of baskets for the transfer of personnel to the Secretary of State, with an explanation of the circumstances in which the use of the basket was deemed


necessary.
(b) ensure all personnel have access at all times to immersion suits.
(c) only employ personnel who have valid United Kingdom work permits.
(d) only use vessels which are of a standard which is equal to that of U.K. registered vessels as regards safety; and ensure that such standards are met; and insist, as a condition of the chartering of a vessel that Department of Trade inspectors may at any time have access to the vessel.
(e) ensure that safety inspectors have at all times access to any offshore installations without prior notice.".
There are five parts to the amendment and I shall take them in turn, but by way of introduction I emphasise that we are dealing with the serious matter of safety in the North Sea. We discussed this at length in Committee and had a valuable debate. Like others of my hon. Friends I have detailed the deaths and accidents in the North Sea. We on the Opposition Benches have called in aid the safety at sea charter, drawn up by my colleagues in the House, of whom my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) was the leading member, and a group of trade unionists.
If I take it as read, it is because we spent some time on it during the Second Reading and in Committee. The Minister of State responded to the charter, and part of our debate in Committee was on the detailed reply that the Minister of State gave to the delegation that went to see him.
The amendment begins by saying:
No person, company or organisation may operate in controlled waters unless they have agreed to the following terms and conditions".
The first condition relates to the use of baskets. This is a method of transferring people from a rig and, as the Secretary of State said, this would be done only in an emergency. We went into what constituted an emergency. We made the point that in other parts of the world, for example in Norway, there are very much stricter rules governing the use of baskets.
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This is an important matter. We take the point put to us by the Minister of State when we discussed the issue with him at the Department of Energy. We merely ask that each time baskets are used to transfer personnel it is reported to the Secretary of State, with an explanation of the need for their use. The information could be collected by the Department and after a year or two the point could be proved one way or the other.
Paragraph (b) would ensure that
all personnel have access at all time to immersion suits".
That is an important safety measure in the cold waters of the North Sea off Orkney and Shetland and the north-west of Scotland. The Royal Air Force provides such equipment to crews who might have to ditch in the North Sea. Last year a number of us went to visit a rig from Aberdeen and back to Sumburgh. We were provided with immersion suits and told that they were absolutely necessary. All personnel should have access to them at all times.
Paragraph (c) concerns United Kingdom work permits. The responsibility is principally that of the Home Office. Over the years the trade unions have argued forcefully that if work permits are necessary on the mainland they should be necessary on the rigs. In Committee we argued that the rigs, and perhaps the safety zones, should be treated as part of the United Kingdom.
One problem is that people may arrive on the rigs from Norway, but it would be easy for the employers to report

that a work permit had been applied for and was in use. There is always a point of exit back to the United Kingdom proper. It would be a simple task.
As my hon. Friend the Member for Kingston upon Hull, East knows, there is a problem particularly with catering staff, whose wages are low. A person working without a permit knows that he may have a problem if he comes to the mainland, so he keeps his mouth shut.
Paragraph (d) lays down that only vessels should be used
which are of a standard which is equal to that of U.K. registered vessels as regards safety".
It is said that there would be difficulties when ships sailing under flags of convenience were in the safety zones. The Minister of State may argue that, if we take action, action might be taken against us in different parts of the world. I do not necessarily accept that, but that is why we have included the phrase "as regards safety". It is safety that we are concerned with here. It is the one thing that we have pulled out of the general argument.
On the last point, what we are asking for is applicable in Norway, namely,
that safety inspectors have at all times access to any offshore installations without prior notice".
What is the point of an inspection if notice has to be given? Anyone who was in the Services will be aware that, when it was known that there was to be an inspection, it was necessary to blanco everything in sight. Surely the safety inspectors should have access to any offshore installation without prior notice.
Although we did not get all that we wanted on this the replies that the Minister gave were extremely helpful. They are a start in the longer process of getting the safety charter applied to the North Sea. We shall continue to press for that. What we have done in this five-part amendment is to put to the Government changes that oug ht to be made with regard to safety.
If it is thought that work permits have nothing to do with safety, the House should remember that it is helpful in an emergency if people on the rigs can speak the same language or at least understand each other. It is like the problem in the Welsh pits after the war. It was not chauvinism when the Welsh miners did not like the Poles in the pits in the early days. If someone is in trouble, he wants to be able to communicate quickly and briefly. It is difficult when people do not speak the same language.
All the points in the amendment relate to safety, and I hope that the Minister will accept it.

Mr. Douglas: I agree with the amendment that has been moved by my right hon. Friend the Member far Leeds, South (Mr. Rees). With the indulgence of the House I should like to return to one or two aspects of the safety provisions of the Bill which my right hon. Friend may not have wanted to go over again because they were covered in Committee.
In regard to the designation of a safety zone, I press the Minister again on the reasons for curtailing this to 500 metres. I know that this is part of the international convention and that there are difficulties about extending it, but the Minister should take cognisance of the spread of the anchor chains of the new generation of semi-submersibles. The safety zone of 500 metres is insufficient to cater for the spread of the 12 or perhaps more anchor chains that might be in a star configuration or whatever configuration is deemed necessary. To restrict the zone to 500 metres does not give the degree of safety that is


necessary when dealing with vessels that can drill in water from 2,000 to 5,000 ft deep, although they would hardly be anchored in 2,000 ft of water.

Mr. Deputy Speaker: Order. Could the hon. Member enlighten me as to which amendment he is addressing himself to? He should be addressing himself to amendment No. 14. It think Mr. Speaker said that he would allow discussion on amendment No. 13, but it ought to be one or other of those.

Mr. Douglas: I respect your stricture, Mr. Deputy Speaker. I am dealing with the generality of safety in amendment No. 14. If we are talking about safety in terms of a charter, we have to look at the zone to which that charter will apply. This relates to clause 20, where we designate particular areas as safety zones.

Mr. Deputy Speaker: We are actually talking about clause 23, not clause 20.

Mr. Douglas: I understand. I submit to you, Mr. Deputy Speaker, that clauses 20 to 27 hang together. One cannot speak about any of these clauses without referring to the interpretation clause and, indeed, to the meaning of offshore installations in clause 23. I am talking about an offshore installation around which there is a safety zone. It is perhaps a rather technical point, but a semi-submersible has a safety zone designated around it. I am arguing that the safety zone to be designated around an offshore installation, which is a semi-submersible, should be greater than 500 metres. I trust that I am now in order, Mr. Deputy Speaker.

Mr. Dennis Skinner: Yes, my hon. Friend is in the safety zone.

Mr. Douglas: I am always grateful to my hon. Friend the Member for Bolsover (Mr. Skinner) for keeping me on the right lines. He knows the rules of this place very well and we are indebted to him.
I hope that the Minister will take this point on board, because many representations have been made to the effect that, although there are provisions to extend the safety zone, they are not given the same statutory force as the provisions in the Bill.
The type of vessel that may enter the safety zone brings me to a part of the amendment that I intended to move to clause 20. I wish to press the Minister on the question of the pilotage of these vessels. As he represents an area adjacent to the Moray Firth, he knows that such waters may at times be extremely difficult to navigate and pilots are therefore required.
Section 4(2) and (3) of the Merchant Shipping Act 1979, which gives certain powers to the Pilotage Commission, says:
(2) The Secretary of State may by order confer on the Commission such functions, in addition to the functions conferred on the Commission by this Act, as he considers appropriate for any of the purposes mentioned in the preceding subsection.
(3) Without prejudice to the generality of the preceding subsection, an order in pursuance of that subsection may in particular provide for the making of schemes under which payments may be made by the Commission for the purpose of compensating pilots",
and so on.
We have here a provision whereby the Secretary of State may by order do certain things. We know that this

trigger has been held up, and this is causing great difficulty and uncertainty especially in pilotage in Scotland. I realise that this may be the responsibility of another Minister, but now is an appropriate time to raise the matter. There is no Scot on the Pilotage Commission and the problems of navigating Scottish rivers and areas adjacent to the North Sea are causing much concern. We know that the European Commission is trying to achieve harmonisation in the matter, but harmonisation may not be wholly desirable and practical for the problems in the United Kingdom.
A European Commission directive about oil, gas and chemical tankers provides that vessels of less than 1,600 gross tonnes are not required to carry pilots. I submit, as do my constituents, that such vessels can be as lethal and disastrous as tankers of more than 1,600 gross tonnes.
I could argue, despite the views of some Members of the European Parliament, that pilotage should be compulsory for all tankers in the congested waters of the Community. Such vessels may enter safety zones without any properly qualified person aboard. We are not discussing merely the safety zones as we now have them. I am sorry that the hon. Member for Dorset, South (Viscount Cranborne) is no longer present. We are reaching a situation where there might be offshore installations very close to land in the English Channel and the Moray Firth.

Mr. Dalyell: I wish to associate myself with the remarks of my hon. Friend. He represents the north bank of the Forth and I represent the south bank. It so happens that two of the senior officials of the Forth Pilots Association are my constituents. I concur with everything that my hon. Friend has said. I urge Ministers to recognise that this is a really important matter.

Mr. Douglas: As my hon. Friend has said, he represents the area south of the Forth and I represent the area north of it. I have to pay tolls on the Forth bridge to visit my hon. Friend, and vice versa. I ask that the Government take cognisance of a serious situation. There is the problem of vessels moving around the safety zones and the installations and the problem of other vessels that have individuals in charge of them who are not properly qualified to mavigate in the hazardous areas of the North Sea and our coastal waters.
I declare an interest, because I advise a diving company called Colmex Diving. The certification of divers is a pressing issue. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has done a great deal in pursuing the issue and an order has appeared before the House. However, there is still great concern that individuals who are not properly qualified to dive in the hazardous areas of the North Sea have obtained certificates. How many certificates were issued for divers in the North Sea by companies themselves? Individuals come on board who may have qualifications gained at American or other diving schools and companies see fit to put their imprimaturs on them, but that is not necessarily the imprimatur of the Department. I hope that the Minister will tell us how many individuals are diving in the North Sea on the strength of qualifications that were obtained by the companies that have employed them at some stage.
What is happening to the diving school at Fort William? Proper safety is related to proper training. If we are to train


people and have them certificated, we must provide proper training provisions. I know that all my hon. Friends are anxious to learn what is happening to the Fort William school.
I trust that the Minister will recognise that these are not political issues. I do not feel that there is any great party political mileage to be obtained from pursuing them and I am sure that the Minister will confirm that. These are

issues that we must try to face objectively so that we assist those who operate in the extremely hazardous environment of the North Sea, and who will no doubt have to enter the even more hazardous environment of the western sectors of the Irish Sea and west of Shetland. I hope that the Minister will give us his considered view on the issues that my right hon. Friend the Member for Leeds, South and I have raised.

Mr. John Prescott: I am glad of the opportunity briefly to say a few words about safety, with which I have been involved since becoming a Member of this place in 1970. I declare an interest because I am a member of the National Union of Seamen, which organises quite a few members who work in the North Sea. It is pleasurable to take up the remarks of my hon. Friend the Member for Dunfermline (Mr. Douglas), who has spent a considerable time participating over the years in debates on safety in the North Sea. On many occasions only one or two hon. Members have been involved. He declared an interest in Colmex. My only connection with Colmex is that it taught me to dive, an interest that I have pursued for a long time. It gives me considerable satisfaction to know that we processed through the House in those 10 years many improvements in the diving regulations, under Governments of both parties. They have improved conditions for divers and reduced the high rate of deaths that were occurring in this most dangerous of occupations.
Although I was not on the Committee, I should like to thank all the hon. Members on the Committee who addressed themselves to the safety charter. It was developed by Labour Members with the trade unions and was launched in Aberdeen in October..I am grateful to my right hon. Friend the Member for Leeds, South (Mr. Rees) who introduced the matter into the Second Reading of the Bill. He and many members of the Committee pursued the arguments embodied in the safety charter and amendment No. 14 covers a number of points in it.
I am also grateful to the Minister for receiving, probably uniquely, the trade unions and Labour Members with a full representation of civil servants to listen to the arguments and the views about the charter. That was followed by a full reply, which we appreciate, on the matters of safety and our demands that the 20-point charter be implemented by the Government. The Minister will not be surprised if we do not accept all his arguments as to why he cannot implement some or many parts of the charter. Some are already under review and we shall wait to see what he has to say.
There are some important points under review. One that has excercised the concern of many seamen, in the difficult conditions of the North Sea, is that of interface between ships and oil rigs and how to get cargoes from the one to the other in difficult weather. There is heavy lifting gear which at one moment may seem to be safe but which, when the waves have shoved the ship over by 14 or 15 feet, becomes a dangerous piece of metal slashing around. We hope that some attention can be given to that because we know that technical measures have been found to take account of these adjustments and that is an important question, about which we hope to hear from the Government in the study so that there can be some recommendations.
Having expressed my appreciation for all that has been done by the members of the Committee, and the attention addressed to the charter, I am pleased also to note that while the Government may not be able to implement all our points, the Labour Party is well on its way to seeing that whatever is left should be implemented by an incoming Labour Government. A good start to that was the Scottish Labour Party conference at Perth, which adopted the 20-point charter. We welcome that development.
In making some points about this amendment I bear in mind some replies given in the correspondence with the Minister about his reaction to our charter. I have not read all the proceedings of the Committee. I hope to do so, so as to read the fuller explanation that the Minister may have given. I know that the response that we received on the charter was made available to members of the Committee, who were then able to argue with the Minister about the justification of some of the views in his response.
In the argument about baskets, a judgment has to be made about whether one is prepared to enforce standards on people who may not want to carry them out by voluntary agreement. It may be convenient to get off a vessel at a particular time by basket because the person concerned wants to go home after a long time on the rig. The basket may be the only way to do so. A judgment has to be made and all the unions involved have decided that the basket should not be used. We recognise that there may be certain exceptional circumstances to which the amendment attempts to address itself.
Norway has already accepted that immersion suits should be implemented on its oil rigs. I believe that two such suits should be made available at different points on the rig. The Government still appear to be studying whether they are required. There should be no doubt about their requirement. I am aware of one contractor who has approached my union with an immersion suit. He says that he is having difficulty in interesting Government Departments in it and mentioned the Department of Trade. Governments should be interested in any product on the market. I take the Under-Secretary of State's nod as meaning that it may be possible to consider such suits and I shall pass the message on. If anyone makes an improved suit, it will be a great asset to the seamen who may be thrown into the sea either from the rig or the ship. I hope that the Government can reach a speedy conclusion, because other countries implemented it some time ago.
Work permits seem to be causing the Government some difficulty. The Bill is a step forward because it now provides the power to bring in an order and extend the Immigration Act 1971 to the rigs. The basis of the argument is that one cannot implement work permits unless the Immigration Act 1971 applies and, in this case, it does not apply to the oil rigs. Even if the Government are not convinced that the power should be extended, at least it would leave the Labour Party with a framework of legislation to bring in immigration controls and extend work permits.
When one considers the statement of the Under-Secretary of State that in a recent survey conducted by the Inland Revenue only 15 per cent. of those polled were foreign workers, I do not wish him to believe that that is 15 per cent. of all occupations. Our evidence suggests that the figure is not as low as 15 per cent., but we shall try to obtain some more valuable information to check that. In some occupations, of which diving is one, it is a considerably higher percentage because it is a smaller part of the labour force.
Divers who have put much time and money into extensive training are now finding out that other people are prepared to work for considerably less in order to get experience of the North Sea and then go to work somewhere else. The divers have not received a wage increase for three years and some have been told that they will be paid for the few weeks that they work—many other workers face the same position—but that they must get the


rest of the money through unemployment benefit. That is totally unsatisfactory and we are doing our best to prevent it. Many professions are under considerable pressure and have great difficulty in maintaining jobs. I hope that we can give more information about that later.

Mr. Dalyell: Some hon. Members in Committee hoped that there would be a statement from Ministers on the issues raised about tax. We made a specific request that Mr. Linkie, the head of the East Kilbride centre, should be contacted about the view of the Inland Revenue, who had to operate the scheme, about tax avoidance or evasion in the North Sea, often by foreign nationals.

Mr. Prescott: I thank my hon. Friend for that intervention. Taxation has always been a contentious issue and I fully endorse what he has said.
I always find it difficult to understand why the Government believe that they cannot extend immigration controls. They readily admitted in their response that many workers going to the rigs already come through our immigration controls in one form or another, or they may fly directly out to Norway. France and Norway impose controls without any difficulties. I cannot believe, when we have all the talk about the security of our rigs, with commandos and submarines standing by, that our Special Branch does not have a good idea of who is on our rigs. Why are we building up such military squads if a man can catch a plane, go out to the rig and do whatever damage he wishes? It is nonsense. If the Government cannot do it, they should borrow the Special Branch's computers, which I am sure can keep watch on every man who goes on a rig. I do not accept that the Government cannot extend their powers to cover rig workers.
I believe that the argument about access to the rigs was made in Committee. We want such access, particularly for health and safety inspectors. The Minister has assured us that the health and safety inspector can go out any time he wishes, but the general practice now seems to be that two or three days' notice is given. That is great, but it is not good enough. The sanction should be that he might drop out of the blue to inspect what is happening at that particular time rather than something that has been prepared for his visit.
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The argument has always been that there is not enough space on helicopters and that they are always full. I believe that on average the helicopters fly with 50 or 60 per cent. capacity, and that might even be a generous estimate. We therefore cannot accept that argument. We understand that employers do not like someone dropping out of the blue to inspect the rigs. That is a human reaction.
However, the number of inspectors is important, particularly as in some cases the Minister seems to be relying on codes rather than on statutory requirements. That being so, it should be backed up with the sanction that an inspector might just drop in to see whether the code is being enforced. So far, we are not convinced by the responses that we have received.
The maintenance of adequate and safe manning and competency standards on vessels is a cause of concern not only in the North Sea but in all areas of maritime activity. The amendment says that if we are prepared to establish a minimum standard for the United Kingdom, that should be the minimum standard that we are prepared to enforce

on other vessels; otherwise, what is the point of having minimum standards geared to minimum safety manning levels on a vessel?
If any further evidence is required, we need only remember the tragic loss of the "Union Star" and the lifeboat in the Penlee affair just before Christmas. Once again, the House was confronted with the fact that a vessel inside territorial waters, owned by a British company had lower safety standards flying under another flag than the standards required had it been registered under its own flag. Many men died as a result of that incident.
I welcome the setting up of a public inquiry, but the argument about minimum safety standards causes considerable concern when it is discovered that the crews are either not competent or inadequate or that the vessels are insufficiently manned. In some cases that can lead to the loss of the ship or, tragically, to the lives of the brave men who try to rescue the crew, simply because Parliament has not enforced minimum standards within our own territorial waters. Perhaps we shall hear more about that in the coming months as a result of the public inquiry.
The Minister has talked about the possibility of supply boats to the North Sea being solely enforced by "M" notices. Such notices are a neat way of avoiding one's obligations. An "M" notice means maritime notice. It means that no one bothers to observe the recommendation because there is no legal obligation to do so.
The reality about safety is that we have moved from codes, recommendations and voluntary agreements because they have failed. The number of deaths and accidents continue to increase. That is why diving and seafaring has moved more and more towards statutory control. I become alarmed when the Minister talks about submersibles—submarines—in respect of which we have no regulations.
Frankly, the industry has always been loth to accept statutory requirements until a few lads die and it finds difficulty running for cover. Yet after all these experiences, the Minister is suggesting that codes of practice will be sufficient for submersibles. That will be fine until we lose another submersible, only 10 hours of air are left, the heat is running out and no one can find it. Once again there will be great concern from the press, and politicians will be accused of getting all the publicity. Now is the time to say that that is not adequate—before the incident occurs. As sure as eggs is eggs, one can be certain of another incident. Great attention will, of course, be given to it.
Therefore, I have always been most strongly against the reliance on codes and practices. We seem to be going further along that road. Debates in Committee and the House, the awareness shown by the Minister in his full responses and some things under consideration to be implemented are large steps forward from the beginning of the 1970s when not much attention was given in the House to safety and when an awful lot of people were dying. The situation has improved since then. However, we cannot shake off this concern with voluntary cooperation, good will and the best practices. They fail in the North Sea. The quicker we realise that and enforce standards, the sooner we will come into line with the French, Norwegians and others. Only then will we achieve the levels that mean greater enforcement of statutory requirements. That will lead to fewer deaths and accidents. One cannot prevent them, but one can make a good step towards that aim.
I hope that these debates will contribute to the day when we will implement all 20 points in the charter and make conditions considerably safer for the many lads who work on, below and above the North Sea, producing a valuable resource for Britain.

Mr. Michael Morris: The hon. Member for Kingston upon Hull, East (Mr. Prescott) made a powerful contribution. I shall address a few remarks to subsection 1(c) of amendment No. 14, concerning the employment of only
personnel who have valid United Kingdom work permits.
Opposition Members and my hon. Friends expressed much surprise when we discussed this dimension in Committee. It was discovered that the United Kingdom Immigration Acts did not apply in the North Sea. Hon. Members who served on the Public Accounts Committee know that we considered the black economy in some depth. One of the biggest areas of leakage was undoubtedly those employed on North Sea oil rigs. It may be to the Government's satisfaction that only 15 per cent. of the workers are not currently covered by United Kingdom taxation. However, it is worth reminding Ministers that the numbers involved are not the odd half dozen. From memory, 15 per cent. of those involved must mean over 1,000—at least well into the hundreds.
Some evidence showed that people were not just flying in from Norway by helicopter—thereby avoiding United Kingdom immigration, but that numbers of people were coming through United Kingdom immigration, who also did not have work permits. The Minister may be unable to give us some categorical assurance this evening that all those employed on North Sea rigs will have work permits in future. However, I hope he can tell us that this loophole will be closed in another place. Nowhere else in the world, least of all in the United States, does such a situation exist. Any worker in the oil industry, in any offshore capacity, with anything to do with America, would have no hope of work without a work permit. The same applies throughout the world. Britain must be the only anomaly. I hope that the Minister can give some reassurance that the Government will stop this situation.

Mr. Gray: I am grateful to the House and to the right hon. Member for Leeds, South (Mr. Rees) for giving us another opportunity to debate safety. As the hon. Member for Kingston upon Hull, East (Mr. Prescott) rightly said, we dealt at considerable length with the subject in Committee. I am glad that he is to read the proceedings, because he will find that many interesting and useful contributions were made.
I reiterate what the hon. Gentleman said about the useful meetings that we had with Labour Members and the unions that visited me with their 20-point plan. I said in Committee, and I say again, that I looked at that plan, to some extent, as one would a probing amendment. Those who presented it were not wholly satisfied that it had all the answers and that it required no amendment.
When the deputation came to see me, the hon. Gentleman said that there would be consultations with some other Government Departments involved. He said that the members of the deputation would come back to see me in a few months' time when they had more information and that they would give me some more figures, which I shall welcome.
The Government are as anxious as the Opposition are to ensure that safety standards in the North Sea are maintained and improved. I wish to defend the stance that I took in Committee about guidelines, as opposed to legislating for everything.
The hon. Gentleman made a statement with which no one could disagree, because it might happen. We all hope that it will not. He said that one day something would happen to one of the submersibles. That is a possibility. However, I remind the hon. Gentleman that merely legislating will not necessarily avoid such an accident.
I shall use the example of the Norwegian sector. The Norwegians have legislated to a tremendous extent. Perhaps some would consider that they have almost overlegislated in some areas, yet, tragically, they have had a greater share of ill-luck than has been experienced on the United Kingdom continental shelf. Therefore, I do not think that legislation is necessarily the be-all and end-all.
It is the training and attitude of all those who operate and work there that is important. That is something that we can only encourage all the time, while trying to ensure that it is improved. I shall come back to the charter and the points that the hon. Gentleman made, because a number of them overlap points made by the right hon. Member for Leeds, South.
With this amendment we are discussing amendment No. 13, which was tabled by the hon. Member for Dunfermline (Mr. Douglas). The Government have no powers to establish pilotage districts over the continental shelf. A requirement that vessels entering safety zone installations on the continental shelf must have on board a pilot or a master with a pilotage certificate would call for international agreement. Thus, a new convention laying down international obligations on the use of pilots in certain areas of the high seas would have to be negotiated within the Inter-Governmental Maritime Consultative Organisation by its member States.
I hope that the hon. Member for Dunfermline will accept that as an explanation of why the amendment that he did not move would not have been acceptable to the Government, anyway. That is an Irish way of putting it, but I know that the hon. Gentleman understands what I mean.

Mr. Robert Maclennan: What is the Government's view about the possibility of obtaining international agreement, which would enable such legislation to be introduced in the House? If there had to be international agreement, a Government would have to initiate the discussions. Would the Government be prepared to do so?

Mr. Gray: We would not be at this stage, first, because the existing legislation is adequate. Secondly, as the hon. Gentleman will be aware, such matters are slow-moving and it is easier to introduce something that requires only the legislation of one's own Parliament than to have to negotiate on an international scale. We have not given that possibility serious thought. At present we do not intend to initiate such discussions.

Mr. Dalyell: It seems that we need carrier pigeons to find out what has happened on the subject of tax. Specific questions were asked in Committee. I understood that the Minister would give us some information.

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Mr. Gray: I shall say something about tax. However, I shall not pursue the point that the hon. Gentleman put to me in Committee and again tonight because, as I explained at that time, this is really a Treasury matter. The hon. Gentleman should take it up with Treasury Ministers.
The right hon. Member for Leeds, South and the hon. Member for Kingston upon Hull, East mentioned baskets. I refer them both to my Department's safety letter, No. 10 of 1980, which laid down the limited situations in which a basket may be used, together with the conditions of such use. In fact, the terms of the letter were drawn up by a working party in which both the operators and the unions participated. They were agreed by the oil industry advisory committee of the Health and Safety Commission.
In view of the stringent conditions specified in the letter, which have already been agreed by both sides of the offshore industry, I cannot see any need at this stage to make the terms and conditions of use part of the operating permission for an installation. Using the same argument, I cannot see any reason to involve the Secretary of State for Energy in a reporting procedure each time a basket is used.
However, I readily accept that the letter to which I have referred did not require that either the movement of personnel by basket or the reasons for so doing should be recorded. However, if hon. Members feel that the letter should be reviewed so that such movements shall be recorded on the installation, if they care to take the matter up with me in writing I will ensure that their remarks are referred to the Health and Safety Commission for consideration.
The question of personnel having access at all times to immersion suits has also been referred to. My Department is considering the practical value of immersion suits. If such suits are to be issued, it is important to ensure that they are of the right type and will perform adequately under specified conditions. The situation was highlighted as a result of the loss of the Alexander Keilland.
As part of the overall consideration, my Department has commissioned a research project into the design and performance of such suits. My latest information is that we should have that report in about three months' time. This work is being carried out by the Robert Gordon Institute of Technology in Aberdeen. The offshore survival unit of that institute is involved to a large extent. I visited the institute myself about two months ago and had an opportunity of seeing some of the work that goes on there and some of the training that is offered to those going to work on the North Sea. It was an impressive experience.

Mr. Prescott: Did the Minister have a suit on?

Mr. Gray: No, I must admit that on that occasion I did not, but I did on a number of occasions when I visited oil installations.
The subject of work permits was discussed extensively in Committee on 16 March. I regret that I can only reiterate the position as I explained it to the Committee. I shall do that briefly.
Implicit in the amendment is the view that an unduly high proportion of the offshore work force consists of non-United Kingdom nationals. It reflects the views put to me at a meeting in June 1981 with the Inter Union Offshore Oil Committee; namely, that the Government should exert

pressure on oil companies via a work permit scheme to ensure that a higher proportion of United Kingdom nationals are employed.
First, may I put the scale of this problem in perspective? As I explained in Committee, the most recent survey of employment on the United Kingdom continental shelf, carried out by the Inland Revenue, showed that in July 1981 about 85 per cent. of the total United Kingdom continental shelf work force were United Kingdom nationals. But that apart, entry to and stay in this country of overseas nationals is controlled, under the Immigration Act 1971, by the Home Office. The legislation does not apply offshore, and work permits for persons employed entirely offshore are not required.
We had an interesting exchange of views in Committee on that very subject, because we were fortunate in having the right hon. Member for Leeds, South leading for the Opposition. Having been Home Secretary, he had been very much involved with the workings of the Immigration Act. He frankly admitted—many members of the Committee would have been in the same position—that it had not been fully appreciated—

Mr. Douglas: I think that my right hon. Friend took the very strong view—it is unfortunate that he is not present—that if he had to reconsider the position today lie would not accept the advice that he was given and would seek to apply the Act offshore.

Mr. Gray: The hon. Gentleman was a little premature in his intervention. I was going to say exactly that. The right hon. Gentleman said that at the time in question the significance of the measure in this respect had not been appreciated and that if he had to do it again he would do it differently.
The provisions of the Bill do not require such an adjustment to the Immigration Act 1971. An extension of the work permit scheme to the UKCS would, however, require an amendment to the 1971 Act which could not be described as minor or consequential. It is not thought that the scope of the Bill is wide enough to admit a substantial item of immigration law.
Several hon. Members, including my hon. Friend the Member for Northampton, South (Mr. Morris) mentioned tax and the fact that people working in the North Sea were evading tax. It is not possible to say precisely what percentage of employees who are liable to pay United Kingdom tax do not do so. I understand that a report to the Public Accounts Committee in 1979 estimated that the PAYE tax loss in the North Sea in 1971 was between £10 million and £20 million, and that it ran at about that annual figure up to 1973–74. The cumulative total up to 1978–79 was put at approximately £60 million. A substantial sum of money is involved.
However, a survey in 1980, to which I have already referred, which monitored the general level of compliance and investigated individual cases of non-compliance, indicated that the earlier figures were overestimates. Sample exercises carried out since 1980 have produced only a few small cases of PAYE evasion, apart from those already under investigation, and confirmed that the work done by two of the Inland Revenue special officers had brought the North Sea to a satisfactory level of PAYE compliance.

Mr. Michael Morris: Is the House to understand that, on the immigration dimension, Department of Energy


Ministers are saying that this is not their field of activity and that on the whole they would rather leave it alone? If that is the stance, it is not a very satisfactory one, because hon. Members on each side of the Committee took the view that, whatever may have been correct in 1971, we are now in 1982, in changed circumstances and the Government should look at the question. While it is not a Department of Energy matter, I hope that my hon. Friend will be able to tell the House that the question is being actively pursued with the Home Office, rather than being left in abeyance.
I am encouraged to hear that the Inland Revenue is satisfied concerning PAYE. I should like to know—perhaps not this evening—whether the Inland Revenue is equally satisfied concerning those who are not paying PAYE. They may be categorised as self-employed. If they are overseas employees, is there some form of reciprocal tax, or are they not paying tax to anyone?

Mr. Gray: An extension of the Immigration Act would require substantial new legislation and could not have been included in the Bill. We have taken legal advice and the position that I have outlined is the best advice available to us. However, that does not mean that the matter could not be dealt with by the Home Office at another time, though I cannot say whether it will feature in future legislation. We have informed the Home Office of the situation, so it is aware of the problem.
I am glad that my hon. Friend the Member for Northampton, South is reassured by the information from the Inland Revenue. As to the payment of tax by the self-employed and workers from other countries, we have arrangements with some countries, but I do not suggest that they are foolproof or that we are satisfied with the situation. We have consultations with the Inland Revenue from time to time and no doubt the Revenue will be making its own arrangements to try to improve the situation.
However, neither of those matters is the direct responsibility of my Department, although we are involved.

Mr. Dalyell: I am curious to know how the Minister can answer the point about security put so graphically by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). Obviously there must be records of who is on the rigs. If the records are not available, one shudders for reasons other than the loss of tax. I do not see that a solution is so difficult.

Mr. Gray: Perhaps it is not so difficult, but it is difficult for my Department, because it is not our responsibility. We are anxious to do what we can on matters in which we have discretion, but the two matters that have been raised by hon. Members are not the Department's direct responsibility. No doubt those who read the report of our deliberations will note what has been said, but I cannot give the hon. Member for West Lothian (Mr. Dalyell) an answer tonight.

Mr. Prescott: I understand that before the hon. Gentleman became a Minister the Department of Energy co-operated actively with the Services to consider how we could protect the rigs militarily from an external threat.
Immigration Acts are used to prevent subversives—however they are defined—from coming

into this country. If we set up a ring of steel around the rigs, but have no controls over people flying out of them, is the Minister satisfied that there will not be attacks from within as well as from without?

Mr. Gray: I am satisfied on security. I have answered the tax point to the best of my ability and hon. Members will have to raise any further queries with the Inland Revenue. I am sorry that I cannot be more helpful.
I was asked about vessels matching United Kingdom standards on safety and so on. The safety standards of vessels are the subject of international agreement and are the responsibility of the flag State. I agree that there can be no room for complacency, but the United Kingdom is second to none, in both the implementation of internationally agreed safety and social standards and their enforcement.
However, that does not justify the United Kingdom seeking to control the standards of every vessel that trades in our waters. I can give some reassurance about the safety standards of vessels flying other than the British flag. The European conference on maritime safety in Paris on 26 January 1982 adopted a memorandum of understanding on port State control, establishing with effect from 1 July this year a harmonised and co-ordinated system for the inspection of foreign ships calling at European ports. The purpose will be to detect those that fail to meet the standards laid down in the international conventions, to secure the rectification of deficiencies and to discourage the operation of such vessels. That system will be operated on the United Kingdom continental shelf by inspectors from the Department of Trade.
I am sorry frequently to allude to other Departments, but the hon. Member for Kingston upon Hull, East will realise that there is a considerable amount of overlap. The system will represent a positive European response to the problem of substandard ships of any flag.
The House might be interested to know that the British supply vessel fleet is fully utilised. I am advised that 92 per cent. of available United Kingdom-owned supply vessels are operating in our waters. They meet 60 per cent. of the offshore supply demand to serve the oil and gas installations on the United Kingdom continental shelf.

Mr. Prescott: The Minister is giving the stock answer, but with a European dimension involving port State. It is all voluntary. Perhaps it is a step forward. We have for some time used the port State argument to enforce standards. Frankly, the Department of Trade cannot even manage the ships that call at our ports. I have experience of that.
If we determine a minimum standard for vessels in our waters, we are entitled under the SOLAS agreements to stop ships that we consider to be unsafe. I do not believe that it is being argued that the standards are excessive. Under international law we are entitled to say that ships below the standard will not come into our waters. The standard should be made a condition of the contract to operate under the United Kingdom Continental Shelf Act 1964. The Minister says that the oil companies are recommended to lay down the minimum standard. Making it a condition would ensure proper and adequate standards, and there would be none of these difficulties.

Mr. Gray: I take the hon. Gentleman's point. We shall no doubt come back to it.
The question of safety inspectors, without prior notice, having access at all time to offshore installations was also raised by the hon. Member for Kingston upon Hull, East and the right hon. Member for Leeds, South. Again, we discussed the issue for some time in Committee. I am not persuaded that safety inspectors necessarily need the power to inspect offshore installations without prior notice or that an enhancement of safety would result from such a power.
Opposition Members intimate that prior notice leads to the employment of wheezes to ensure that, for instance, with helicopters, the house is full. We have no evidence of that. We know of no difficulties. We have not had complaints from people who work offshore. I gave the Committee the figures. We have about 70 installations. In 1980 there were 141 inspections, and in 1981, 181. We do not believe that safety would be enhanced by such legislation. The arrangements are working adequately. Again, if the hon. Gentleman or his hon. Friends can persuade us, we are persuadable on this issue, but we do not see that it would do anything to improve safety.

Mr. Dalyell: I want to ask the Minister of State a simple question. When he was in the Services, what did he do when he knew that there was going to be an inspection within the next few days?

Mr. Gray: I do not think that it would have made the slightest difference. I was a very good soldier.
I do not think that we would do anything to improve safety by accepting that recommendation, but it is something that I am happy to talk about again.

Mr. Douglas: I have waited patiently for replies to the points that I made about the certification of divers and the diving school. These are the Minister's responsibility. How many certificates were issued for divers by the companies? Also, what is the future of the diving school at Fort William? It may be that the Minister of State will want to write to me on these issues because he does not have the information readily available. I appreciate that.

Mr. Gray: In relation to diving certificates, I do not have a figure of that sort available in the middle of a Report stage debate. If the hon. Gentleman wishes to put down a question or otherwise, I shall let him have the answer. The diving school is handled by the Department of Employment. It is not in my area of responsibility, so I cannot give him up-to-date information on that.

Amendment negatived.

Clause 31

PROVISIONS AS TO REGULATIONS, ORDERS ETC.

Mr. Rowlands: I beg to move amendment No. 15, in page 35, line 3, after 'section', insert '3(1) and '.
It is a dubious privilege to end up with the last amendment on Report. I recall that I ended up with the last amendment in Committee. Like that one, this amendment is significant. It is fitting that we come back almost to where we started—the whole question of parliamentary accountability for all actions and powers taken away under the Bill by the Secretary of State.
I feel that I could almost put on the record and disappear because we have in different ways debated this issue over and over again. I make no apology for returning to it. When we debated clause 31 in Committee we tried to

change the procedure for responsibility to the House to be subject to an affirmative resolution rather than a negative resolution. During that debate we raised the issue of making the powers of the Secretary of State accountable to Parliament under clause 31, but we did not have an amendment down to that effect.
We decided to return to the issue because, as we have argued since the first time the Bill came before the House on Second Reading through almost every Committee debate and on the first two new clauses which we moved earlier today, we believe that the Secretary of State should be accountable to Parliament for the powers he is taking under the Bill.
I pointed out in Committee that clause 3(1) is one of the most important provisions in the whole of part I. It gives the Secretary of State power to direct the British National Oil Corporation to exercise its power of disposal, and all the rest of it. It is the trigger provision for the privatisation of the British National Oil Corporation, yet not a single provision in clause 3(1) is to be subject to any further parliamentary responsibility or accountability. As clause 31 is now drafted, none of those provisions will be subject to the affirmative resolution or even to the negative resolution.
We believe that, wherever we stand on privatisation, there is a powerful case in parliamentary terms for hon. Members on both sides of the House who are jealous of parliamentary rights, scrutiny and accountability to support the concept that the most important directions given under part I of the Bill should be subject to parliamentary scrutiny.
It is no use the Government arguing, as they did in Committee, that these directions are no different from those under the 1975 Act. They are extremely important substantive directions which trigger off the whole process of privatisation of BNOC's assets. We believe that those directions at least should be subject to parliamentary accountability if only through the negative procedure. We accept that in Committee we lost the case for all directions and orders under clause 31 to be subject to the affirmative resolution. We have not sought to return to that, but we believe that the directions under clause 3(1) should be subject to some form of parliamentary scrutiny under clause 31.
What is the case against this? We heard it at some length in Committee from the Secretary of State and from the Minister of State. The Government argued that the directions were no different from those under the 1975 Act, and that as those directions were not subject to parliamentary scrutiny, these should not be either. But these are directions of a very different kind. This is a matter of substantial and substantive power. These directions cannot be compared with those envisaged in the 1975 Act, because the directions under clause 3(1) trigger off the whole process of privatisation. We do not accept such a comparison, and we do not accept the "original precedent" argument used by the Secretary of State.
The other part of the Government's case against any form of parliamentary accountability for the Secretary of State's actions under clause 3(1) was that they had already told the House exactly what they intended to do. They said that they had already told us of their intention to sell off 51 per cent., the manner in which this would be done, and so forth, but that is not so. The Secretary of State's decision to direct BNOC to create subsidiaries and shares and to float them off, which is the basic power under


clause 3(1), will be a major new step. We debated at some length when and how this would be done in relation to an earlier amendment on the valuation and the method of sale. Nevertheless, the power that the Secretary of State is taking under clause 3(1) should be subject at least to the negative procedure under clause 31.
I therefore ask the Government to reconsider their position. To paraphrase the good old song about the girl who could not say "No", we are the guys who cannot accept the answer "No" on as significant, reasonable and parliamentary a matter as this amendment. I hope that the Minister will reconsider this in the spirit in which we have debated it. We have paid enough tributes to him. I now claim my rain check on all my tributes to him.

Mr. Dalyell: Sing it.

Mr. Rowlands: No, I only sing with at least 99 others. I am president of a male voice choir which is 101-strong, but as the House can see, I do not have the other 100 with me today although I realise, of course, that it is quality rather than quantity that counts.
As we come to the final stages of the Report stage of a Bill which has been very little changed as a result of the 100 hours and more of detailed examination that we have devoted to it, I hope that as a fellow parliamentarian the Minister will accept this one last plea that the power to make directions that the Secretary of State seeks under clause 3(1) should be subject to some form of parliamentary scrutiny.
That is all we are asking, and it is utterly reasonable. I have battered at this door repeatedly. In spite of the Minister of State's amiability, he says "No" most of the time. This time, however, I hope that he will say "Yes", or "Maybe", or that he will agree to look at the matter again. I do not mind how he phrases the reply as long as he gives the assurance that he will reconsider the point that we made in Committee and to which we have now returned on Report.
The matter is important and significant. We decided to end the Report stage on this amendment because parliamentary accountability in the Bill is so weak and poor that he should at least make this concession. I ask and plead with him to do so.

Mr. Gray: In moving the amendment the hon. Member for Merthyr Tydfil (Mr. Rowlands) said that we had discussed the matter a great deal in Committee and that he would only repeat what he had said many times before. He will not be surprised, therefore, if I repeat what I have said on many previous occasions.
I assure him that we fully recognise the need for proper parliamentary accountability and debate and that that is why we made major policy statements about our plans for BNOC both on and before Second Reading. We explained at length in Committee exactly how we intended to use the powers in part I, and we have answered as many as possible of the detailed questions that he and his right hon. and hon. Friends have asked. Those who have followed our proceedings should be in no doubt about our policy and how we intend to implement it.
In earlier debates we cited many of the precedents from earlier Labour and Conservative legislation that we are following in the Bill. I shall not quote them all again. They

are all on record in the Committee proceedings. It may be instructive to those hon. Members who were not on the Committee—there may not be many here, but I see present a few of my hon. Friends who are sufficiently interested to see the Bill complete its Report stage—to be told that on many occasions, for example, we used the precedent of the Petroleum and Submarine Pipe-Lines Act 1975. The corporation was set up with powers to give effect to participation agreements, but there was no requirement to submit those agreements to Parliament for approval.
The Secretary of State was empowered by section 3(1) to approve plans for the general conduct of the corporation's undertakings. There was no requirement to report those plans to Parliament. The Secretary of State was also empowered to require reviews of the corporation's affairs. Those reviews do not have to be shown to Parliament. I could quote many other precedents, but I do not intend to weary the House with them. Everyone feels a little tired at the end of a long day.
The hon. Member for Merthyr Tydfil was an exceptionally hard-working member of the Committee. He made a great contribution to it. I sincerely would have liked to make the concession that he seeks, but I regret that on this occasion the answer must still be "No".

Mr. Rowlands: It is regrettable that the Minister has adopted that negative attitude on an issue of such seriousness. I shall not press the amendment to a Division, because I calculate that the result would be 12 votes to two, unless a few more Conservative Members come out of the woodwork. The issue of parliamentary accountability, which is raised by the powers that the Secretary of State seeks to take in the Bill, is of serious concern.

Mr. Dalyell: Hear, hear.

Mr. Rowlands: There will be other opportunities to raise it. In the spirit in which we have debated most of the Bill, I beg to ask leave to withdraw the Bill.

Amendment, by leave, withdrawn.

Schedule 4

THE PATENTS ACT I977

Amendment made: No. 16, in page 60, column 3, leave out lines 32 to 37 and insert—



'In Schedule 4—



in paragraph 2(1), the proviso;



in paragraph 10, in sub-paragraph (1) the words "Subject to sub-paragraph (2) below" and sub-paragraph (2);



in paragraph 26 the words "or by regulations made under section 31 of this Act";



in paragraph 27 the words "or under any regulations made under section 31 of this Act"; and



in paragraph 28 the words "and any regulations under section 31 of this Act".'.—[Mr. Gray.]

Bill to be read the Third time tomorrow.

DEFENCE

Ordered,
That Mr. John Cartwright be discharged from the Defence Committee and Mr. Gregor MacKenzie be added to the Committee.—[Mr. Philip Holland, on behalf of the Committee of Selection.]

HMS "Speedy"

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]

Mr. Keith Speed: I am grateful for the opportunity to raise the rather strange circumstances surrounding the all too short life and the apparent demise of HMS "Speedy". The termination of her life is in unseemly haste and for no reason that I can determine. HMS "Speedy" was not named after myself, but she has a number of illustrious predecessors, including a frigate that was with the fleet in the eighteenth century.
HMS "Speedy" is a 119-tonne jetfoil that was built by Boeing in Seattle and fitted out by Vospers of Portsmouth with much British equipment aboard. She was ordered by the previous Labour Government for evaluating the offshore oil and fishery protection roles and other roles where the Royal Navy could use her unique capabilities of high speed and extreme manoeuvrability. The hon. Member for Sheffield, Attercliffe (Mr. Duffy), who was the Under-Secretary of State for Defence for the Royal Navy in the previous Labour Government, will confirm strongly the latter capability.
HMS "Speedy" was launched in Seattle by Mrs. Margaret Jay, the wife of our then ambassador to the United States, in June 1979. She was commissioned into the Royal Navy in the summer of 1980. Her operational evaluation in what is called the offshore tapestry role—that is, fishery and oil rig protection—was planned for two phases. Phase 1 was to identify her main strengths and weaknesses in the offshore tapestry role. Phase 2 was to investigate in greater depth the tasks that phase 1 showed to be the most interesting.
In the event, phase 1 was restricted and phase 2 was never carried out. No practical examination has been made of non-tapestry tasks—for example, her use as a fast attack craft, in patrolling separation lanes, as a security ship and fast resupply vessel of men or materials plus her possible use in the mine countermeasure role. I believe that the evaluations were restricted and not proceeded with for financial reasons. I hope that my hon. Friend the Under-Secretary of State will deal with that when he replies.
At the beginning of February the story appeared—first on the tapes and subsequently in the national press—that HMS "Speedy" was to be sold or otherwise disposed of because North Sea weather conditions had proved too severe for her. Having been to sea in the Firth of Forth in gale conditions, I saw her proceeding at speeds of up to 42 knots, which no other surface craft could have achieved in such weather.
Having cut short the various evaluations, I find the reason given by the Ministry of Defence strange, to say the least. Boeing has it in writing—as far as I know the letter is neither private nor classified�žin a letter from the Ministry of Defence, which it received last December, only a couple of months before her disposal was announced, that
the sea-state and weather limitations of the craft are certainly no worse than that advised by Boeing at the time that we bought her. Indeed, our experience is that the operating envelope can be slightly extended beyond the limits predicted by the company.
Therefore, I ask the Minister, has "Speedy" failed to meet any of Boeing's or Vosper's specifications?
On the evaluation point, I had several interesting hours in her in rough weather and was launched from her in a

searider in pretty hairy weather conditions. I should be grateful if the Minister would tell me, before the decision was made to dispose of "Speedy", how many other Ministers and flag officers have been out to sea in her, and the date of those trips.
After personal discussions with the entire crew, it seemed to me that the "Speedy" has been popular with the crew of all rates and ranks and I should be grateful if the Minister could confirm this. As my hon. Friend will know, she has done exercises with the German Navy in he Baltic. It would be helpful for the House and the public to know the reaction of the German Navy to her.
In view of the reasons given by the Ministry of Defence in February when her disposal was announced, perhaps the Minister could also tell the House what the limitations were that prevented foil- and hull-borne operations and the launching of searider craft, and whether these are less than those claimed by her builders at the time of purchase. As my hon. Friend and the House will appreciate, a craft of this kind can ride, once she achieves a certain speed, up on the foil, and below a certain speed, she rides like a normal boat upon her hull.
While I was Minister responsible for the Royal Navy I did not envisage that "Speedy" would be evaluated for the offshore tapestry role and that would be the end of the story. Like my predecessor who ordered her, I expected an evaluation into a variety of other roles, making use of her unique capabilities, that include speeds up to 50 knots and turning rates of about 6 degrees a second, which are fantastic by any yardstick.
I should be grateful if the Minister would tell the House what other roles have been evaluated and with what results. I do not believe that there has been any time for such evaluation to take place. If that is so, that makes her disposal now all the more extraordinary. It would also be useful if the House were told what other high-speed craft are available for target training on other Royal Navy ships, particularly now that it has been announced that the hovercraft trials unit is also being wound up.
My hon. Friend will appreciate the importance of this, because our conventional frigates, destroyers and corvettes need to have high-speed craft to train. Many potential adversaries in many parts of the world have these high-speed craft and are unlikely to be accommodating enough to lend us their craft so that we can train using them as targets. Traditionally we have always had high-speed craft of our own. However, we are in the process of scrapping them or winding up the unit.
Finally, and in some ways most important, as the Minister will be aware, Boeing has recently offered to pay to run on "Speedy" for an agreed period so that these various evaluations and trials can be completed. My understanding is that the only cost that would then fall on the Ministry of Defence would be the manpower costs of her 24-strong crew, who presumably have to be paid for anyway, as it is unlikely that they will all be declared compulsorily redundant. The offer has been rejected out of hand. I cannot believe that we know all that there is to know about this advanced, high technology vessel and her method of operation.
The United States Navy is bringing into operation craft similar to "Speedy" and probably considerably larger, called PHMs. I went to sea in one last week. They are armed with missiles and a 76 mm gun and incorporate the


high speed and extreme manoeuvrability of "Speedy". The United States Navy believes in such craft. So do some of our allies and many of our potential adversaries.
There are too many disturbing questions that must be answered, in fairness to the manufacturers, the crew of "Speedy", the Royal Navy and our defence effort. At the end of the day, the overriding constraint may have been financial or possibly a prejudice against the Royal Navy. I hope that I am wrong. We are once again, as with HMS "Invincible" and the hovercraft unit, baling out of a high technology area where we have much developing experience, as I am sure my hon. Friend would agree.
I hope that even at this late stage, Boeing's offer, which is both imaginative and generous, will be accepted and that the future of "Speedy" in a number of roles can be properly and fully evaluated. I hope that Boeing's offer is not being rejected on administrative grounds or on grounds that it will be too difficult to unscramble the drafting procedures of the crew. I am sure that the computers at HMS "Centurion", which deal with the drafting procedures, are flexible enough to cope. If the crews are asked whether they wish to volunteer to be re-drafted to "Speedy", the drafting officer will receive an overwhelmingly affirmative reply from both officers and men.
I hope that even at this late hour my hon. Friend can give a positive answer at least to that proposal, which will mean very little additional expenditure by the Ministry of Defence or out of the defence budget. It will mean that this imaginative vessel, which has already done well, can be further evaluated. If the answer is still "No", we must all draw our own conclusions. Her premature disposal would seem to be almost an act of spite or of burying one's head in the sand. I am sure that my hon. Friend and my right hon. Friend the Secretary of State would not wish that.
What of her future? I believe that "Speedy" and craft like her have a future in all maritime nations. She has proved herself so far and should be allowed the chance so that we can examine her in the various roles that I have outlined tonight.
I have posed some searching questions, for which I make no apology. I look forward to my hon. Friend's reply and I hope that what appears to be the far too short life of one of the latest acquisitions of the Royal Navy can be extended, and that HMS "Speedy" can continue along the lines and traditions of her eminent predecessors and serve with distinction in the fleet for many years to come.

The Under-Secretary of State for the Armed Forces (Mr. Jerry Wiggin): My hon. Friend the Member for Ashford (Mr. Speed) has quite rightly drawn attention to the useful work done by his near namesake, HMS "Speedy" during her service in the Royal Navy. I am grateful to him for providing me with the opportunity this evening to say something about the results of her operational evaluation during the past two years, as well as to put the record straight about the reasons for the recent decision to pay her off.
HMS "Speedy" is a militarised version of the 117-tonne Boeing jetfoil passenger ferry and was ordered by the Ministry of Defence in 1978. The Royal Navy wished to evaluate the suitability of hydrofoils for military use,

principally in the offshore protection role. After her fitting-out was completed by Vosper Thornycroft Ltd. HMS "Speedy" commenced her operational evaluation in 1980.
The opportunity was taken to operate HMS "Speedy" in as many different offshore environments around the British coast as possible in order to establish for which tasks she was best suited and how she performed in varying operating conditions. That programme was designed not only to gauge the operational potential of HMS "Speedy" herself but to provide a demonstration of the usefulness of hydrofoils in general, HMS "Speedy" being rather smaller than military hydrofoils such as the American Pegasus class.
During her operational evaluation HMS "Speedy" was thoroughly put through her paces as a fishery protection vessel. She showed that in favourable operating conditions she was capable of carrying out the majority of the tasks performed by the ships of the fishery protection squadron. In this connection my hon. Friend will recall that during his time in the Ministry of Defence HMS "Speedy" successfully intercepted and arrested with her speed a Spanish trawler fishing illegally within British limits off the South-West Coast and escorted her to harbour.
My hon. Friend will also know that, by its very nature, a ship of a hydrofoil type and of this size suffers from a number of deficiencies. First, she is relatively incapable of towing, certainly not any vessel of substanital size. Secondly, a hydrofoil is not good at "loitering", a task that she is often required to perform when involved in fishery protection work. By that I mean with the foils below the water and out of use and at speeds at which she could not plane.
Thirdly, and very much the overriding factor, she is not able to operate in sea states much above the top end of 5. In the sea areas in which we have been operating our fishery protection vessels, I am led to believe that this sea state, and worse, prevails for about 25 per cent. of the time.
It is true that the forte of HMS "Speedy" was shown to be her ability to operate at very high speed in the right weather conditions. This conferred obvious operational advantages. She demonstrated that during a normal sortie she was capable of covering a much larger area than conventional vessels in the same time. Compared with aircraft, while the area covered per sortie was less than half, she was capable of collecting a similar amount of information about the number of fishing vessels and was able to identify positively a greater number. She could, of course, also be used to carry out boardings.
Another feature, especially valuable in this context, has been the capacity of HMS "Speedy" to arrive on the scene suddenly and with little forewarning, and so catch illegal fishing vessels red-handed. This has had a useful deterrent effect.
There is no doubt, therefore, that HMS "Speedy" was capable of making a positive contribution to the offshore patrol task, but I again stress that that was only in favourable operating conditions. There were severe limitations on the performance of HMS "Speedy". She was generally unable to operate on her foil by day above sea state 5 and at night above sea state 4, when the operator was unable to gauge the wave pitch. This limitation did not apply when she was hull-borne, although as in any small boat the going tended to become a little rough in high


seas and she was unable in such conditions to maintain the high speed of which she was capable when foil-borne and which was her most useful characteristic.
In this context, I remind my hon. Friend that on the first occasion he planned to visit her some defect made the ship inoperable, and although on the second occasion he is perfectly right to say that the wind was about force 8 or 9, the sea state was such that in the end it was the captain's judgment that it was about the maximum operating conditions for her. I do not claim to be anything like the expert my hon. Friend is, but I further understand that, particularly in the fishery protection role, when the weather is worse than that it is easiest for those who would contravene our fishing regulations to operate. In sea states of 6, 7 and 8 it is necessary to be able to apprehend a foreign vessel, or even one of our own, that is breaking our rules. This ship was unable to do that.
A matter that is not so widely known, although I am sure my hon. Friend is aware of it, concerns the ship's extremely limited endurance. She carries sufficient fuel for only about 10 hours of foil-borne running, at about 45 knots. That gives a total range, out and back, of approximately 500 miles. In terms of coastal responsibilities for offshore fishing protection, that is a considerable limitation on her operating capacity.
The operational evaluation of HMS "Speedy" has provided the Royal Navy with a thorough understanding of the vessel's potential. It has also given a useful insight into the military application of hydrofoils in general. I know my hon. Friend wishes that that evaluation could continue. However, it has effectively been taken as far as it usefully can. Enough was learnt about strengths and weaknesses of HMS "Speedy" over the period during which she was in operational service with the Royal Navy for a reasoned judgment to be formed on the craft's longer-term utility.
The trials particularly served to show that, while HMS "Speedy" might be a useful addition to the Royal Navy's capability, she could not completely replace any of the existing class of offshore patrol vessels. It would have created problems for the captain of the fishery protection squadron to have a craft in his squadron limited in both endurance and to a particular area, when he required flexible operating capability to cover the waters around the United Kingdom for whose policing he was responsible. Therefore, it was concluded that the expense of further trials was not justified.
I assure my hon. Friend that that decision has been reached as a result of the professional advice of the Navy. I certainly resent the suggestion, and I am sure he did not mean to imply, that decision-making is based on prejudice against one or other of the Services. Within the overall allocated budgets, the Navy has to make certain decisions. As I understand it, the professional advice of those responsible is that, given the limitations that I have described, a conventional vessel—despite the lack of speed—gives an all round better return for money over a given period.
Against that background it was decided to dispose of HMS "Speedy" as one of a number of measures designed to bring the naval share of the defence budget down to target in the financial year ahead. I have no shame in saying that. Debates on this subject are well known and we shall have an opportunity to debate the matter again when we consider the defence White Paper. This decision represents only a minor adjustment to the broad decisions

taken in our reappraisal last year of the defence programme. However, given the pressure on the defence budget, we can maintain only elements of the programme that are essential.
It is right that I should emphasise to the House that the decision to pay the vessel off does not stem, as was alleged, from design shortcomings. It is simply that the evaluation has been taken sufficiently far for the potential of HMS "Speedy" to be assessed. She showed that, in favourable weather conditions, she was capable of putting up an effective performance. It is also fair to say—1 agree with my hon. Friend on this—that her limitations in bad weather turned out to be less than her manufacturers had originally predicted.
My hon. Friend referred to the offer made by Boeing. There were two factors in our rejection of this offer. First, that it came extremely late, after postings had been arranged for the crew and plans had been made for the laying up of the ship. Secondly, the offer was, of course, for only a limited number of operating hours. It was felt—I believe rightly—that once a decision was taken it would not have been of any profit to the Navy to continue with this work.

Mr. Speed: My hon. Friend the Minister said that the offer was made for a "limited number" of hours. Can he be more specific? My understanding is that it was clearly not an open-ended commitment for ever and a day, but that the offer was on an agreed basis between his Department and Boeing, so that the evaluations could be properly done. There was not a specific limitation on the number of hours laid down by Boeing.

Mr. Wiggin: I do not believe that there is any secret about this matter, but I have not seen the letter. It may be commercially in confidence. I do not know.

Mr. Speed: I assure my hon. Friend that there is nothing confidential about this matter. I have checked with Boeing so that I would not embarrass my hon. Friend or anyone else. There was nothing confidential about the hours.

Mr. Wiggin: The answer to my hon. Friend's question is that the offer was for 200 hours' worth of work. We did not feel that in those circumstances it was right and proper to accept that offer.
The ship is to be offered for sale in the first instance. While it is true that to date no purchasers have come forward, we are still hopeful that her disposal will attract some interest in various parts of the world. Only today we received some inquiries.
My hon. Friend asked about the reaction of the crew to the decision to dispose of the ship. We have no evidence that service in HMS "Speedy" has been in any way unpopular. On the contrary, all those involved seem to have enjoyed the novel and unusual experience.
My hon. Friend asked how many Ministers and flag officers had been to see the ship. My hon. Friend, when he was the Minister responsible for the Royal Navy, was the only Minister to have been to sea in HMS "Speedy". I understand that some flag officers have been to visit her and two have been to sea in her. I do not wish to delude my hon. Friend —one of those was the chief medical officer.
I think that it is reasonable to say that those who have been closely involved with the ship's operation have also


been closely involved in this decision. I have no reason to doubt that the professional advice is the best possible judgment of those who were asked to consider the matter.
HMS "Speedy" did some exercises with the German Navy and successfully carried out all the trials for which she was programmed. However, it is not right that I should be the mouthpiece for the German Navy, although I understand that there is a widespread feeling among experts in NATO that that ship is on the small side for such work and that if hydrofoils are to have a future, a larger version will be needed.
With regard to target practice, I understand that infinitely the cheapest way of providing targets to represent fast-moving vessels is to use helicopters.
I sympathise with my hon. Friend's wish to see the Navy continue to operate HMS "Speedy". I know that he has taken a close personal interest in the vessel. She has provided the Royal Navy with some useful lessons. I do not believe that we can be taken to task for not wishing to investigate modern technology. The Navy has seen fit to operate that ship for a limited period and to carry out, as far as is practicable, work in our own waters of a realistic nature. Nevertheless, it has been proved to the satisfaction of the seamen concerned that the present state of the art is not sufficiently advanced for us to make use of such vessels at present. Given that fact, the course has been finished and the ship is available for sale.

Question put and agreed to.

Adjourned accordingly at three minutes past Twelve o'clock.